house price vs. wage issue

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#1952215 5-Feb-2018 23:11

mattwnz:

IcI:

Technofreak:

I don't think you can solely blame the governments for house price rises. ... Yes the government has some control over demand ... Local government and other factors tend to control supply and supply is where a lot of the issues lie.

... The other main factor in the price of an existing house is it's location ... The government has very little say on that.

... I guess to sum up we need to realise the government on it's own has very little to do with house prices. ...

I think we disagree on the amount of control government has on these factors. Please remember that local government / councils are still government; maybe not national govt, but still.

The govt are the ones that decide where a road should be built. They decide how to zone certain regions, they decide what amenities should be available. The govt set a lot of rules which shape the market.

The high cost of building, and the lack of competition in the building market also have a lot to do with high housing prices. And that is due to the central governments lack of regulation and having polcies that encourage more entrants into NZ. For some items you find when building, that although it appears their is competition with different companies selling competing products, those companies may all be owned by the same parent company, they just operate under different brands and sell exclusive branded goods. Some things just so expensive in NZ when it comes to building, even when compared to Oz. The RRP on many items is also often huge compared to the price you can get it for if you negotiate.

The less local government have any control over, the better IMO. The huge variances in policies, fees etc just creates so many problems. That is why for some things, the government have had to bring in national standards for councils.

Also, local government is very unprofessional.

I just did a subdivision and we encountered a curious situation where we had been granted S223 consent (that is the consent granted by the local authority stating that they have approved your plans etc and that you are authorised to build in accordance with them and if you do so, they will sign off the work) in relation to the access road.

For 2 houses, they required a metalled 3.5 metre road with passing bays every 100m. The original design was crowned to fall to a ditch either side. I suggested that a simple cross fall with one ditch would be better and cheaper because then only 1 ditch would be needed. The surveyors agreed and said they would do a variation with the council.

The council roading manager then came on site and said that we "should" have been told to widen the highway opposite the entrance and if we wanted the variation, we would have to do that. The surveyor said "We were not, the 223 does not require us to and if you insist on it, we would just build the consented road as it stands."

"Well, I don't think we would be able to sign that off..." came the reply.

"But you have already issued the consent!"

"Yes, but I don't think we could really do that..."

Eventually we resolved it - at a cost of $10,000 to me - but I was staggered that the council were so unprofessional and/or incompetent that they seemed not to grasp that once they had issued a consent to build, they could not very well retrospectively decide that they had made an error with no consequences other than fobbing off the costs on the person applying for the consent.

It was pretty poor all round and mind-blowingly expensive to boot.

Aredwood

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#1952252 6-Feb-2018 02:07

Geektastic:

Also, local government is very unprofessional.

I just did a subdivision and we encountered a curious situation where we had been granted S223 consent (that is the consent granted by the local authority stating that they have approved your plans etc and that you are authorised to build in accordance with them and if you do so, they will sign off the work) in relation to the access road.

For 2 houses, they required a metalled 3.5 metre road with passing bays every 100m. The original design was crowned to fall to a ditch either side. I suggested that a simple cross fall with one ditch would be better and cheaper because then only 1 ditch would be needed. The surveyors agreed and said they would do a variation with the council.

The council roading manager then came on site and said that we "should" have been told to widen the highway opposite the entrance and if we wanted the variation, we would have to do that. The surveyor said "We were not, the 223 does not require us to and if you insist on it, we would just build the consented road as it stands."

"Well, I don't think we would be able to sign that off..." came the reply.

"But you have already issued the consent!"

"Yes, but I don't think we could really do that..."

Eventually we resolved it - at a cost of $10,000 to me - but I was staggered that the council were so unprofessional and/or incompetent that they seemed not to grasp that once they had issued a consent to build, they could not very well retrospectively decide that they had made an error with no consequences other than fobbing off the costs on the person applying for the consent.

It was pretty poor all round and mind-blowingly expensive to boot.

@Geektastic This is completely normal for councils in NZ.

My Flash point is to do with backflow protection. Auckland council has a habit of insisting that medium hazard backflow prevention valves be installed on the water supply to coffee machines. Despite such valves not being required. And the plumbing codes defining all water downstream of the outlet of a medium or high hazard backflow valve installed for other than containment. Is to be classed as not drinkable water.

So in otherwords, the council is insisting that coffee machines are to be supplied with water that is legally classed as unfit for human consumption.

When I tried pointing that out to them, they claimed that they have had failures with low hazard rated valves, without giving me any examples. (If it really was a low hazard in the failure example, no one would have gotten sick anyway, if someone did, then the hazard is actually a medium or high hazard) And they said that I would need to apply for a variation to get the hazard rating changed (which means that they are admitting that they have incorrectly classified the coffee machine as a medium hazard) And yes the codes do specify drinks dispensing machines as low hazard.

Its no wonder the councils can't manage water supply hazards properly, and poison an entire town. If they can't even manage getting water to a coffee machine without breaking the law.

Edited to add:

Medium and high hazard valves are both expensive to buy, require annual testing, And even removing them requires a building consent. So if one gets installed unnecessarily, It puts significant costs onto the building owner / tenant.

kingdragonfly

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#1952258 6-Feb-2018 06:42

https://www.stuff.co.nz/life-style/homed/houses/101108236/welsh-downton-abbey-listed-for-the-price-of-a-vacant-block-in-auckland

"Welsh Downton Abbey listed for the price of a vacant block in Auckland"
by Natalia Didovich/Homed

"35 Vale Road, St Heliers is on the market for the same price as this Welsh castle."

"A luxurious 200-year-old castle in North Wales has been listed with the same reserve price as a vacant 809 square metre block of land in the Auckland suburb of Saint Heliers.

The Grade II heritage listed castle, otherwise known as Westbury Castle, will be sold at a public auction in mid-February with a reserve price of £1.5 million (NZ$2.8 million).

But what will $2.8 million get you in central Auckland? A bare patch of land located 200 metres from St Heliers Beach with Resource and Building Consent granted for two three-storied properties.

Westbury Castle is made up of a 12-bedroom mansion house, a servants' flat and nine self-contained luxury apartments located in the castle's west wing."

Reciprocity

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#1952314 6-Feb-2018 10:44

But, St. Helliers >> Wales
By some margin apparently :-)

Geektastic

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#1952338 6-Feb-2018 11:44

kingdragonfly: https://www.stuff.co.nz/life-style/homed/houses/101108236/welsh-downton-abbey-listed-for-the-price-of-a-vacant-block-in-auckland

"Welsh Downton Abbey listed for the price of a vacant block in Auckland"
by Natalia Didovich/Homed

"35 Vale Road, St Heliers is on the market for the same price as this Welsh castle."

"A luxurious 200-year-old castle in North Wales has been listed with the same reserve price as a vacant 809 square metre block of land in the Auckland suburb of Saint Heliers.

The Grade II heritage listed castle, otherwise known as Westbury Castle, will be sold at a public auction in mid-February with a reserve price of £1.5 million (NZ$2.8 million).

But what will $2.8 million get you in central Auckland? A bare patch of land located 200 metres from St Heliers Beach with Resource and Building Consent granted for two three-storied properties.

Westbury Castle is made up of a 12-bedroom mansion house, a servants' flat and nine self-contained luxury apartments located in the castle's west wing."

That would be a serious commute.

Also, I would not want the upkeep bills for a Grade II building, thanks.

ANglEAUT

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#1952672 6-Feb-2018 21:34

Geektastic: One thing I thought of. In the UK, if you build a house you can apply for a refund of the VAT (GST) even if you are a private individual rather than a building company. Perhaps that is one suggestion we could make to those in power when we have the opportunity? It would reduce a new build by the owner by 15% and since they will probably be borrowing to build, they won't be having to borrow 15% to just give it away in tax.

That sounds like a very valid option.

Please keep this GZ community vibrant by contributing in a constructive & respectful manner.

Aredwood

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#1952694 6-Feb-2018 23:40

Technofreak:

I see this sort of thing being quoted all the time. Where's our proof? A significant number of the millenials in my extended family own houses, so to say the government is leaving the housing prices alone to look after the baby boomers isn't true.

I'd like to hear what you think the government could do to reduce house prices.

@Technofreak I am both a millennial, and I own my own home, and I have made an on paper capital gain of at least a 1st division lotto win. So although I have benefited alot form the current situation, I can still see that it cannot go on forever.

Look at the average rate of increase in house prices in recent years. $100K / Year when inflation is only around 1-2% is not going to be sustainable long term. Meaning when I retire in approx 2050 (If Im lucky), the average yearly increase in value between then, and when I bought 10 years ago, will almost certainly be less than the increase in recent years. In between, there almost certainly will be booms, plateaus, and maybe some dips. But until I retire, and want to downsize to a retirement home. It doesn't matter much what happens in any given year at first. But when retirement gets closer, If a dip or crash happens just before I need to sell, Or a structural change happens to depress prices. Then I will loose out.

Now look at the baby boomers. Lots of them will be wanting to retire and downsize in the next 10 years or so. So they would be unlikely to vote for any policies that could wipe big money off their house values, right before they want to sell. For a millennial - much less of a problem, unless you have just bought though. Since if a millennial needs to sell their house, It will most likely be to buy another one in the same market. So prices at the time are not as important.

As for reducing house prices - Get rid of the Resource Management Act. And replace it with separate laws regulating the environment, and urban planning. Look at the average increase to house prices, both before and after the RMA was introduced.

I would like to build a small rental property on the corner of my land. Or just rent out that corner to someone who wants to build a tiny house on it. But council rules make it uneconomic for me to build. And I would be breaking a whole host of rules if I allowed someone to build a tiny house on my land. Yet if it was cheaper to do so, It would meet alot of housing and rental demand. As I would be able to provide rental accommodation for a lower cost price than landlords who have to buy standalone homes. You would only need a small increase to the number of available rentals to stop alot of the rent increases.

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GV27

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#1952756 7-Feb-2018 08:11

I'm not sure normalisng tiny houses is the way NZ should head. If we can fix the issues that you're describing then we should be aiming to build safe, warm and sufficient rental accommodation that doesn't tell people the best they can aspire to is a shoebox with a futon.

dryburn

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#1953619 8-Feb-2018 13:36

Currently watching a documentary on the current topic on hand.

https://www.youtube.com/watch?v=HzSAmOQuyjU

MikeAqua

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#1954112 9-Feb-2018 09:56

Aredwood: In short, since NZ doesn't have a constitution, Parliament can make any law that it sees as necessary. (or at least it can when enough politicians agree). So any silly rules enacted by busybody councils can be very easily overruled by central government.

NZ has does have a piecemeal constitution - The NZ Constitution Act is the main component setting out how governance functions and also other key statutes such as the bill of rights confer rights on individuals. It's not as tidy as the US constitution but it's there.

While parliament can enact any laws it wants to, those laws have no effect until they receive the Royal Assent from the Governor General. She can refuse to sign an act if she deemed it necessary (circumstances would have to be extraordinary). Further she can dissolve parliament - this happened in Australia in the 1970s.

Mike

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#1954306 9-Feb-2018 13:26

GV27:

I'm not sure normalisng tiny houses is the way NZ should head. If we can fix the issues that you're describing then we should be aiming to build safe, warm and sufficient rental accommodation that doesn't tell people the best they can aspire to is a shoebox with a futon.

...the alternative being living in cars, or families living in someones garage

Time to get real about what average & lowerclass NZ public can afford to buy or rent.
$500+ rent for a young family isnt sustainable.
If they have to rely on govt handouts just to pay rent, then lets just build something cheap , anything .

Anything is better than families living in their cars , as is happening now
If allowed to build narrow & high(3 stories) , you could get many many units onto my section. Thats many families in homes rather
than just the one(me) as it is .

Geektastic

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#1954369 9-Feb-2018 14:23

1101:

GV27:

I'm not sure normalisng tiny houses is the way NZ should head. If we can fix the issues that you're describing then we should be aiming to build safe, warm and sufficient rental accommodation that doesn't tell people the best they can aspire to is a shoebox with a futon.

...the alternative being living in cars, or families living in someones garage

Time to get real about what average & lowerclass NZ public can afford to buy or rent.
$500+ rent for a young family isnt sustainable.
If they have to rely on govt handouts just to pay rent, then lets just build something cheap , anything .

Anything is better than families living in their cars , as is happening now
If allowed to build narrow & high(3 stories) , you could get many many units onto my section. Thats many families in homes rather
than just the one(me) as it is .

Some zoning needs consideration. We have enough land around our house for 40 houses on 1/4 acre sections. The District plan permits....one.

We are technically rural but it's an asinine designation - it takes 3 minutes to drive to the centre of the village from our house. I can see that they might not want the density of 40 houses but surely 10 would still be semi rural. I am sure that there are heaps of locations where that sort of thing would apply.

dejadeadnz

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#1954586 9-Feb-2018 22:48

MikeAqua:

NZ has does have a piecemeal constitution - The NZ Constitution Act is the main component setting out how governance functions and also other key statutes such as the bill of rights confer rights on individuals. It's not as tidy as the US constitution but it's there.

While parliament can enact any laws it wants to, those laws have no effect until they receive the Royal Assent from the Governor General. She can refuse to sign an act if she deemed it necessary (circumstances would have to be extraordinary). Further she can dissolve parliament - this happened in Australia in the 1970s.

This is the problem with non-lawyers making legal commentary. All of the above is technically true -- you'll be kidding yourself, however, if you think that these constitutional arrangements are anywhere near as much a check on legislative power as the US constitution is. If you can find me any instance of a NZ GG refusing to give royal assent on any significant legislation in the history of NZ, I am all ears.

GV27

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#1955480 12-Feb-2018 07:07

Geektastic:

1101:

GV27:

I'm not sure normalisng tiny houses is the way NZ should head. If we can fix the issues that you're describing then we should be aiming to build safe, warm and sufficient rental accommodation that doesn't tell people the best they can aspire to is a shoebox with a futon.

...the alternative being living in cars, or families living in someones garage

Time to get real about what average & lowerclass NZ public can afford to buy or rent.
$500+ rent for a young family isnt sustainable.
If they have to rely on govt handouts just to pay rent, then lets just build something cheap , anything .

Anything is better than families living in their cars , as is happening now
If allowed to build narrow & high(3 stories) , you could get many many units onto my section. Thats many families in homes rather
than just the one(me) as it is .

Some zoning needs consideration. We have enough land around our house for 40 houses on 1/4 acre sections. The District plan permits....one.

We are technically rural but it's an asinine designation - it takes 3 minutes to drive to the centre of the village from our house. I can see that they might not want the density of 40 houses but surely 10 would still be semi rural. I am sure that there are heaps of locations where that sort of thing would apply.

The District Plan is also written in mind with the fact that Auckland infra like sewerage networks melt down every time someone opens an umbrella.

And I have to disagree 1101, the 'people should be happy with the scraps that fall from the table' is how we got into this mess. We need to aspire to better for people. If we have to change the rules to allow tiny houses, then let's change the rules to allow for decent proper accommodation. You still need to provide the same level of transport and infra either way, so it's not like this is a choice we're having to make between two options - the only questions should be 'how fast can we do it' and 'how can we fast-track it'.

All tiny houses will do is further divide up something already in short supply (land) into smaller pieces and lift the price per sqm of land in Auckland even further. Take a look at Hobsonville Point - 21km from the city centre with $250,000 houses sitting on $600,000 170 sqm sections of land.

Geektastic

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#1955561 12-Feb-2018 10:24

I see Fletchers are treading in the brown stuff a bit financially judging from this morning's news.

I wonder how the "lets build heaps of affordable homes" plan will do if Fletchers sinks...

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