Property costs in NZ - the heart of evil

[BMWST?]

There are quite a few costs that need to be taken into account. My numbers above assumed 3 years to sell all sections...probably far too optimistic...could take up to 10 years! At 10,11,12% interest rates, doesn't take long for profit to significantly reduce. 1500 houses are a lot to sell, I agree.

the development of the subdivision is staged,you dont fully develop 1500 site,you do a couple of streets at a time

[Smifffy]

This is exactly right, and also, as rent increases with inflation, effectively mortgage payments reduce at the same rate, providing interest rates are stable.

No one cares mate, you sound like youre in the same spot I was, cant wait till one of my kids says, why didn't you buy 6 of them dad when they were only a million each.....my first house was 280k I had 40k deposit, 5 years hard saving ... I shat bricks, was on little more than my deposit. Difference was I had no kids and a partner who earnt slightly less. In hind sight I should've bought as much property as I possibly could've over the next 10 years. Would've should've didn't. Mate what I can see is property flat lining for a bit. Don't worry about media hype and all those talking their book. If you want to get in, just do it even If it means living in Titirangi .... Up down now later......all relative.

[Andy67]

the development of the subdivision is staged,you dont fully develop 1500 site,you do a couple of streets at a time

And good luck getting any finance for that sort of project these days.

Shame really. Have a look at the haircut BOS are taking.......

[Andy67]

This is exactly right, and also, as rent increases with inflation, effectively mortgage payments reduce at the same rate, providing interest rates are stable.

All debts must eventually be repaid for sure. Repayments get less over time. I actually sold my house at the top of the last bubble. Went renting and put my equity into the bank because interest rates were so damn atractive , could've been a fuck up but it worked out really well. Interest rates dropped hugely, so the sums changed and I bought another house. Horses for courses really.

[BMWST?]

the key difference in australia vs here is material cost. the reason for that is the cost of materials in NZ is controlled by a duopoly (like groceries). My brother can (and has) imported container loads of mdf and that formica faced MDF way cheaper than he could have bought it here, even with his buy price. (which is very good). How else do you get a house in Straya for way less than it costs here when the trades are getting paid way more? two reasons: land is cheaper, and materials are cheaper.

Don't get me started on subdivisions.

and some of the timber and boards in aussie come from???

[Andy67]

and some of the timber and boards in aussie come from???

As soon as you build from new you are pissing 15 percent up against the wall compared to an an exting dwelling of similar standard. Sux. Market values don't account for construction cost or gst.

[Winston001]

Yes deregulation was a fuck up in the past- that does not mean that it is wrong - just that the deregulation was not handled properly. How come other countries manage to put up lots of houses without fuckups?

They don't. Check out Vancouver. The tragedy is they built leaky buildings before we did so our BIA should have known what to prohibit here.

http://www.qp.gov.bc.ca/condo/

the key difference in australia vs here is material cost. the reason for that is the cost of materials in NZ is controlled by a duopoly (like groceries). My brother can (and has) imported container loads of mdf and that formica faced MDF way cheaper...

True that.

Also Oz houses are simply constructed. I know local builders who have worked over there and been stunned at the lack of bracing and reinforcement. Houses are cheap and quick to build. No earthquakes, no freezing gales and horizontal rain, not much tough weather at all. Their houses are perfectly fine without being strong.

[BMWST?]

No, I know nothing about it - except that you now treat any non-weatherboard houses with suspicion.
I was not criticising it - I was making the point that other markets have managed to get houses made cheaply and efficiently to reduce demand and hence cheapen house prices. We should be able to as well.

no they didnt.Canada had exactly the same problem as we did.The sad thing is wed idnt learn from them about how not to have leaky homes in the first place(untreated timber doesnt rot if it doesnt get wet) and we didnt learn from them about how to fix the problem either.Some of the problems we have with "leaky" houses is directly related to our wet windy weather.
There are new "details" being developed all the time,new flashing methods for windows and doors are just coming into use.
I work in the building industry and i am sad to say there are many people i deal with that do not instil me with confidence

[Winston001]

The Productivity Commission has just released its report on our housing problems: http://www.productivity.govt.nz/draf...engagement/967

As well, here is a nicely dry and balanced commentary from the Reserve Bank which makes some sound points: http://www.rbnz.govt.nz/monpol/about/2989594.html

Finally, the Reserve Bank is moving to tighten up bank lending criteria by requiring mortgages to be a maximum 80% of a house value. That means a 20% deposit which many people cannot afford. It also means that if you want to sell your house, you are going to have to lower your price because the buyers won't have enough dough.

[Andy67]

The Productivity Commission has just released its report on our housing problems: http://www.productivity.govt.nz/draf...engagement/967

As well, here is a nicely dry and balanced commentary from the Reserve Bank which makes some sound points: http://www.rbnz.govt.nz/monpol/about/2989594.html

Finally, the Reserve Bank is moving to tighten up bank lending criteria by requiring mortgages to be a maximum 80% of a house value. That means a 20% deposit which many people cannot afford. It also means that if you want to sell your house, you are going to have to lower your price because the buyers won't have enough dough.

The reserve bank is more interested in capital adequacy. It's a global trend following the recent "troubles" . Liquidity cost will increase and has done so recently as will the appetite for certain types of lending. Thing is the reserve is like a bloke with a 2 burner BBQ. They can talk and implement policy, it's government that will need to execute that initiative. Can't see it myself.

[avgas]

The reserve bank is more interested in capital adequacy. It's a global trend following the recent "troubles" . Liquidity cost will increase and has done so recently as will the appetite for certain types of lending. Thing is the reserve is like a bloke with a 2 burner BBQ. They can talk and implement policy, it's government that will need to execute that initiative. Can't see it myself.

Wot he said.
For YEARS now some of us have been bleeting at bollard that the OCR is promoting a (second) debt crisis. Stating that we may as well prepare to live in 1990's Japan type economics.
Dumb bastard has done nothing. Now he is threatening that he will have to double it next year.........um why couldn't you put it up 25 points a quarter and soften the blow rather than overreacting all the time.

History repeats and Bollard ties the rope for us this time. Can't believe it myself.
But 2.5%? How long was that seriously going to last - I hope he made some money off it.

[Spearfish]

Its interesting what's considered a "first" house today compared with 30 years ago.

Fuck I hate saying this...."Back in my day" a starter house was a 1000 square foot rectangle clad in wide hardly plank stuck in the middle of 500 to 600 square meters with the option of either the 1600 long stainless steel bench in the kitchen next to the free-standing stove or the deluxe double sink 1800 long. The floor was either polyurethane or left to be carpeted the gib stopping was one cote rough as guts for wallpaper. the wall paper, paths, drives, decks, fences, carport (if you were a rich bastard) a garage had to be done by the owners, even the bloody letterbox.
But whole street were left the same with roughly the same style of houses so streets usually had concrete parties doing drives and paths costing just materials, beer, the weekend and more beer.
Kegs were a fuckin disaster to a concrete finish....especially if it was a garage floor and the last truck with the measure rolled up after the keg was tapped.

None if this brick veneer, internal access garage with heat pumps, en suites and dishwashers wrapped in landscaped gardens that gets labeled a "Starter house" to "nest or invest" so "move quickly or risk being disappointed" by missing a "wopper-fucken-tunity".

Hard to start climbing a ladder if you refuse to use the bottom rungs first.

[Coldrider]

Wot he said.
For YEARS now some of us have been bleeting at bollard that the OCR is promoting a (second) debt crisis. Stating that we may as well prepare to live in 1990's Japan type economics.
Dumb bastard has done nothing. Now he is threatening that he will have to double it next year.........um why couldn't you put it up 25 points a quarter and soften the blow rather than overreacting all the time.

History repeats and Bollard ties the rope for us this time. Can't believe it myself.
But 2.5%? How long was that seriously going to last - I hope he made some money off it.

I built my first spec at 20% IR during the wage freeze years in my early twenties, did it then and is a shit load easier now.

[Brett]

The LBP system will pay dividends eventually but expect 5 years to pass before the industry really takes it on board and starts to run with it. Another 5 years before really measureable results in service quality/delivery will be evident. Another 10 to 15 before the objective (including more effective self training and ITO tools/methodology) could be regarded as both achieved and self sustaining.

The registration process is still a bit of a joke...more of a focus on compliance (Eg building act etc.) and understanding where responsibility lies than on improving technical abilities (or at least confirming a basic level...) Then there is the fee...at the moment, my business focus does not require me to be a LBP, however for the few projects I undertake each year as a construction manager, I need to be licenced. (In the process of sorting out Site 3 LBP)...paying $700 odd per year to remain licenced is a bit steep to maintain a licence!
Due to the INSANE levels of red tape, I have nearly had it with construction. I have a set of plans for example that is currently going through building consent stage for a BASIC 230m2 2 story house. The plans are well done, and specify everything that they could want to know...and yet this week the certifier sent me a request for the following:

- Wind zone. The house is situated in what is deemed a "split windzone", all relevant documentation states seasonal variation between low/medium. So I instruct the architects to design house for High windzone, just so that there are no issues. Certifier comes back saying, please provide explanation for choice of high windzone. (Since when did the council/certifiers care about OVER engineering something??)

- Bricks - because the geoteck engineer made reference to a need to ensure protection of "brittle claddings" in the geotech report (something a geotech engineer has absolutely no business commenting on in the first place) the certifier has asked us to detail vertical control joints in the bricks! They argue that the expansive soils (good old auckland clay!) could result in the slab moving and the cladding cracking, but in the main section of the geotech report, they specify the type of foundation footings necessary to ensure complete slab stability...which again we over engineered to ensure that the slab never moves or cracks....Who in the hell puts control joints in brickwork on such a standard, simple to design and build house...retarded.

These are just 2 of some really dumb calls the certifiers are making. They have gone into arse covering mode and actually making the project a pain..cost overruns are already at $1500 for consultants fees to deal with their petty issues. This sort of thing is making the costs of building even worse. My costs unrelated to the physical construction (consent fees, design fees, development contributions, building consent procssing etc. ) are already topping $70k for a total build cost of $530k. (building related only, this particular site was bought developed and serviced already).
Add this to the changes in property GST laws (Land transactions now zero rated...) and it is actually really hard to make money out of building houses anymore. No wonder we're in a housing shortage!

A bit off course, but somewhat relevant to the topic at hand...

[Brett]

Here's some cheap sections:

http://www.trademe.co.nz/Browse/List...x?id=471346940


where the hell is Mura Para anyway? Nice place to live?

Bay of plenty, between Tauranga and Whakatane. Pretty damn rough little town. Shit hole too.