Monday, January 28, 2013

Affordable Housing in Auckland

I see that David Shearer has finally come clean over affordable housing in Auckland. The price for a stand alone house is now $550k, not the bullshit $300k he plucked out of some deep recess to buy a few votes.

$550k is a realistic number. This is pretty much where the market is anyway for a brick and tile 3 bed house in the cheaper suburbs, if you can secure a section. The building costs are already very competitive. Many private companies compete in an open market for the opportunity to build this product and make a fair profit.

The single biggest issue is the section supply. Due to the tight geographical nature of Auckland, good building land is scarce within the current city limits and demand high. Developers and section owners know this and price accordingly. No amount of political ranting is ever going to change this fact. Freeing up the consent processes for developers, to bring land to the market quicker could help, but I wouldn't hold my breath on that to produce cheaper sections. Greater margins for developers is a far more likely outcome.

If you want a new $300k stand alone house, move out of Auckland.

Waiting for idiots like Shearer to give you a cheap house, within an hour of downtown Auckland, will be a high risk and ultimately futile proposition.

And finally remember elephant in the room. The government's $70k GST grab on your $550k new home never rates a  mention by the likes of Shearer when discussing affordability.
Maybe reducing  government size would be a more effective way to  lower the cost of housing.
I won't be holding my breath for that one either.

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