House of cards

New Zealand rental townhouses

Having just taken a trip north for the first time in years, I was enormously impressed with the amount of building going on everywhere. New houses in Taupo. A huge development in Pukekohe. Rows and rows of new houses in the Hamilton area and north of Auckland in places like Silverdale;  there are literally thousands of houses being built. Before we start congratulating the government, you need to realise that none of this has been started in the past year. It takes considerably more time than that to get these developments going. No. In spite of the government’s mantra, ‘nine years of neglect’, virtually all of this development work was started by the previous government.

So why, you may ask, are we spending in excess of $2 billion on the Kiwibuild scheme, when it is now becoming obvious that it was never needed?

Mike Hosking  has a few words to say about that, as you might expect. quote.

KiwiBuild has not had the best of weeks.

In fact, it didn’t have that great a week last week. Last week we got the news that you can flip your property and keep most of the profits – that was despite the Government originally saying you couldn’t.

We also got the news that KiwiBuild ballots have been extended due to lack of demand in some places. That, of course, was based on the fact that KiwiBuild isn’t a home programme for those locked out of the market as the Government told us it was: it’s for six-figure executives who actually have a lot of choice in the market anyway.

Then we find out this week that the $2 billion set aside to build the 100,000 homes isn’t within a mile of being enough. The Ministry of Business, Innovation and Employment says it’s out by about $18b.

The money set aside might build 1000 homes, not 100,000. So far you’ve got limited demand, prices too high and not enough start-up capital, which is why it’s become a buy off the plan scheme from developers – the Government doesn’t have the dough. end quote.

$18 billion. Initially, I did not believe that this could possibly be true. It is such a huge amount of money, for a scheme that buys houses, but then sells them on. Surely there would only be administration costs involved here? That can’t add up to $18 billion, surely? quote.

And that’s before you get to New Plymouth, where the Minister of this increasing calamity announced his programme for Marfell.

Marfell has fallen by the wayside Phil Twyford suggested, and KiwiBuild would be part of its regeneration.

Brilliant. The price limit for Marfell would be $450,000, certainly a lot better than places like Queenstown and Auckland. But unfortunately not that attractive as it turns out given the median price for Marfell is $326,000 – so it’s over $100,000 cheaper on the open market.

Well it’s $326,000 if you take CoreLogic numbers. If you take council numbers it’s actually $271,000 – a full $179,000 cheaper. end quote.

You are kidding me… houses on the open market are cheaper than Kiwibuild houses? That is going to work well, isn’t it? quote.

So what is Phil actually selling? It appears nothing more than a new home. Which is not to be dismissed, as we have said before, we seem to be short of houses. Adding to the supply can’t hurt.

But that’s not what KiwiBuild was supposed to be about. Is the Government entering the home building market to build some houses that would have already been built really doing anything at all?

And is continuing to insist that this is some level of social assistance when it blatantly isn’t, politically wise? When not a week goes by now, where facts defy the spin.

So demand is limited, money is short, the prices are too high, you keep the profits so they’ll be flipped, two-thirds of potential customers are locked out, and that’s before we get to original porky of promising 100,000 houses in 10 years (which is never going to happen). end quote.

That just about sums it up and as I said, seeing how much building is going on all over the country, I am not sure Kiwibuild was ever needed in the first place. Houses are already popping up everywhere. So why are we wasting billions of dollars of taxpayers money on it? quote.

The only real house here, is the house of cards called KiwiBuild. end quote.

Ain’t that the truth?

 


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Accountant. Boring. Loves tax. Needs to get out more. Loves the environment, but hates the Greens. Has been called a dinosaur. Wears it with pride.

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