Property costs in NZ - the heart of evil

[Brett]

I agree- almost every bloody market has a duopoly beause teh market size cant really support much more than that, unless there are a lot of smaller, efficiently run operations competing with them. However, with no cash in hand, and no way to get it from investors -who are all illiquid and up the hilt in property - it will always stay like this unless government regulates pretty much fucking everyything - something I would not typically like to see.

Very true comments re: the size of our markets. Fricken hard work trying to build a new business to compete with the incumbent with only 4 million kiwi folk.

[Brett]

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

I am aware of that, however muddies the numbers

[BMWST?]

- 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??)

low to med.....hahahaha just about everything we do is very high...job today EXTRA HIGH 2.7(2.57 actually) stud,windows at 2.2 lower floor 3 trim studs at each side of just about every lower floor opening and studs at 300 crs.

[Brett]

low to med.....hahahaha just about everything we do is very high...job today EXTRA HIGH 2.7(2.57 actually) stud,windows at 2.2 lower floor 3 trim studs at each side of just about every lower floor opening and studs at 300 crs.

You're in welly though, that would be expected! My current home was specific design...however this house is pretty sheltered.

[flyingcrocodile46]

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!

The funny thing is that Site licences aren't actually a requirement. There is no place in the Act that requires them to sign or certify anything. Design, carpentry, roofing, specialist claddings, waterproofing & P&D are pretty the only LBP's that have to sign anything or have the registration recorded. They really have missed the bus on getting it right. Save youself the $700 and hassle of CPD compliance. Site licenses are a dead end unless the Act is changed to make them accountable or even necessary

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??)

I am a weathertightness expert/ professional witness and a minor shareholder in a private BCA (obviously not the one you are dealing with, which I assume to be either Compass or Professionals). They are obviously quite wrong as it is wind speed which you design for, not the wind zone. BCA/Council GIS files only have generalised information on wind speeds (not zones). The actual wind zones are given in NZS3604 and are only one factor in calculating the project specific wind speeds. NZBC B1 & NZS3604 require that wind speed is calculated specific to the immediate topography (incl trees and ever changing shelter from adjacent housing developments etc). This should not need to be explained to either of the above parties, but it appears that you need to take them to task by doing so and threaten them with a damages claim (the threat does have weight even if it is hollow). Obviously you are dealing with someone who doesn't really know what's what and if your lucky he will recognise that, accept the lesson and back down.

- 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.

Again, a similar story. I have read many Geotech reports containing this recommendation. It is valid more so for strip foundation designs or combinations of strip and raft (for differential movement or if the build platform partially encroaches an area of differing soil types Like part good ground and part certified class H fill). It is generally understood (and sometimes spelt out in the geotech report) that specific design cantilever edge beam raft slabs are designed to compensate for the identified issues in this respect. A simple letter from your engineer telling them so should see them accept the design consideration confirmation. They aren't qualified engineers and would have to have the council engineer carry out a design review to identify omission of a required design consideration before they could legally justify such silliness. Again, threats of seeking a determination and damages compensation in this respect do work. Big penalties for the BCA if they are shown to have abused the process and caused it to take more than the prescribed 20 days. They have to refund the consent application fee.

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...

Yes it is relative because it goes to demonstrate a lack of time benefit to either process or product has resulted from all of the added compliance costs. Just more cost increase through delays.

[flyingcrocodile46]

low to med.....hahahaha just about everything we do is very high...job today EXTRA HIGH 2.7(2.57 actually) stud,windows at 2.2 lower floor 3 trim studs at each side of just about every lower floor opening and studs at 300 crs.

If you're in wellington it maybe (depending on claddings) that earthquake is the higher loading (for bracing) anyway.

[Brian d marge]

bored

800 years old , can be painted , no government certifications ,,,all ok




next

[Flip]

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.

Exfuckingzacly right.

Buy the worst house in the best street you can afford. Stop paying rent to others and get a toe in the door of the property market.

10 Years latter you have paid off half of it and the propery value has doubled. So you own 3/4 of a $500k house that you brought with a $25k deposit. Or do you buy a $25k second hand WRX and keep renting, ten years latter you are still paying rent to me and own a 10 year old WRX pos jalopy.

[Winston001]

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.

True. I admit I'm not up on the exact enforcement of current banking rules.

30 years ago there was the Reserve Ratio which Robert Muldoon used weekly to control NZs internal money flow. For some reason this is now out of favour.

In its place we have the Basel II Accord which specifies Tier I and Tier II Capital Adequacy ratios for banks, the idea being that all banks hold at least 8% of funds deposited in liquifiable assets. So if there is a run on the bank or a financial crisis, there is an 8% cushion.

If a central bank raises the ratio to 9% that means banks have to hold back more money and lend less. Somewhere in this mix is the ability of the central bank to restrict mortgage lending to 80% - which looks like happening. Good idea.

[Andy67]

True. I admit I'm not up on the exact enforcement of current banking rules.

30 years ago there was the Reserve Ratio which Robert Muldoon used weekly to control NZs internal money flow. For some reason this is now out of favour.

In its place we have the Basel II Accord which specifies Tier I and Tier II Capital Adequacy ratios for banks, the idea being that all banks hold at least 8% of funds deposited in liquifiable assets. So if there is a run on the bank or a financial crisis, there is an 8% cushion.

If a central bank raises the ratio to 9% that means banks have to hold back more money and lend less. Somewhere in this mix is the ability of the central bank to restrict mortgage lending to 80% - which looks like happening. Good idea.

All moving to Basel III now mate....the market is a peculiar thing, hard to pick what will be and what will not be considered adequate criteria to lend including LVR ... Loan to equity...very hard to see a return to 2.75 times income policy as well. If you want to cap something that's the way. Some ingenious sod will always find a way to substitute valuation for equity.....I think Government will leave all those decisions to the private sector and concentrate on systemic stability which is far more important. Anyway what would I know?

[Jantar]

Spoken like someone who bought a cheap house way back when. After arriving here in 2006, with money that was worth toilet paper, my wife I have been trying hard to save a deposit for a house, with not much luck. Granted its a on a single salary, but then its a decent salary. No rock star living here. And the thing is that even if we did manage to save 20% on a $500k house ($100,000- yeah right with these rent prices!?) , I am not sure I actually would want to fork over that kind of money for that kind of craphole.

So save $15000 deposit on a $75000 house. The mortgage on that is a fraction of what you now pay in rent and in 2 years you will have saved enough for a deposit on a $200,000 house. It doesn't take long to get up to what you want to achieve. It just means living somewhere less desirable for a while.

[Andy67]

Before you say to Jantar that there are no houses available in Auckland for 75k consider you don't have to buy in Auckland and you certainly don't have to live in it.

[flyingcrocodile46]

So save $15000 deposit on a $75000 house. The mortgage on that is a fraction of what you now pay in rent and in 2 years you will have saved enough for a deposit on a $200,000 house. It doesn't take long to get up to what you want to achieve. It just means living somewhere less desirable for a while.

That's fine if there is employment in that less desireable location and assuming it pays enough to allow savings. Where/what pray tell, is this wonderful housing and employment opportunity?

[flyingcrocodile46]

Before you say to Jantar that there are no houses available in Auckland for 75k consider you don't have to buy in Auckland and you certainly don't have to live in it.

Mate! you couldn't even buy a section in Akld with twice that money. Most areas where sections are available they are selling for closer to five times that value. Hell, even Warkworth is pushing toward $200K now.

[Smifffy]

Sure. That's the attitude to take you places in life.

That's fine if there is employment in that less desireable location and assuming it pays enough to allow savings. Where/what pray tell, is this wonderful housing and employment opportunity?