By Alex Tarrant
The Labour Party's costings for building 100,000 houses over 10 years at an average cost of NZ$300,000 come from Department of Building and Housing figures, the Auckland Council, the New Zealand Housing Foundation and discussions with the building industry.
The NZ$300,000 includes estimated costs for raw land - about NZ$45,000 - which Labour says matches an estimate given by the Auckland Council.
Whether houses could be built for NZ$300,000 inclusive of land costs was raised in Parliament on Tuesday, with Prime Minister John Key, Housing Minister Phil Heatley, and acting Finance Minister Steven Joyce (Bill English is currently in Australia visiting mining developments) all taking pot-shots at Labour's KiwiBuild policy.
But Labour was delighted to hear from Housing Minister Heatley that the cost of bare land for each house in Housing New Zealand's Hobsonville development was NZ$46,000. Heatley argued other 'land' costs on top of that meant total land-related costs of NZ$200,000 in Hobsonville, before houses were actually built.
Labour Party leader David Shearer announced the party's KiwiBuild policy at its annual conference two weeks ago.
Since then, Shearer has been visiting examples of house building projects which Labour says prove dwellings can be built for an average of NZ$300,000 each.
In Wellington last week, Shearer visited a Wellington Housing Foundation development. The Foundation said the four four-bedroom dwellings were each built for NZ$300,000 to NZ$350,000. Then on Monday in Auckland, Shearer visited some medium-sized New Zealand Housing Foundation developments.
Labour argues that economies of scale - bulk material and land purchases - will help it keep build costs down.
In its KiwiBuild policy document, Labour referred to this Department of Building and Housing starter home design competition winner as an example of one type of dwelling that could be built.
That example is of a 120 square-metre, three bedroom house.
Shearer has said different types of dwellings would be built under the scheme - new greenfields housing, town houses, and apartments are all on the radar.
“We’ve got to get away from the idea of a house sitting on a quarter acre section. That’s not going to be the future, particularly, say, in Auckland," Shearer said on Sunday.
Labour gave interest.co.nz ballpark figures provided to it by the New Zealand Housing Foundation of cost breakdowns for houses in a new greenfields development, with each house on about a 300 square metre section:
- 15% (NZ$45,000) for raw land costs
- 25% (NZ$75,000) for taxes, resource consent, building consent costs
- 40% (NZ$120,000) for the actual house
- 20% (NZ$60,000) for development costs
Labour's Annette King told interest.co.nz the Auckland Council believed 14% of build costs related to the cost of raw land - pretty much the same as the Housing Foundation estimate.
Labour also relied on Department of Building and Housing (now part of the Ministry of Business, Innovation and Employment) figures from this DBH calculator here when forming its policy.
The calculator allows for different permutations to be entered. But as an example, it provides an estimated build cost of about NZ$300,000 for a '202 square metre' house type built as part of a group in Auckland with 230 square metres of floor area.
The Ministry of Business, Innovation and Employment told interest.co.nz the calculator relied on figures supplied by Rawlinsons, a quantity surveying and construction consulting firm. The numbers are updated every six months, with the last update provided in July, the Ministry said.
The cost of raw land was subject to much debate in Question Time in Parliament on Tuesday. While Prime Minister John Key and acting Finance Minister Steven Joyce took shots at the policy, King said figures provided by Housing Minister Phil Heatley on the government's Hobsonville development were most interesting.
"In light of his [Heatley's] statement that the Hobsonville affordable housing scheme demonstrates innovative, commercial, market-based solutions, that could be replicated elsewhere in New Zealand, what is the breakdown of the actual cost of land, house, and development for an affordable home to be built at Hobsonville?" King asked Heatley in Question Time.
Heatley had the numbers at hand.
"The bare land cost at Hobsonville's 46k; land for road and reserves, 46k; infrastructure works, 80k; professional consultants, 18k; consenting fees and development levies, 10k. The total cost before finance and margins, 200k," Heatley said.
"That's just the land, but apparently the Labour Party's going to build 100,000 houses, but not..." Heatley said, before being cut off by Speaker Lockwood Smith.
King asked whether Heatley had visited sites within the current Auckland City boundaries such as in Mount Roskill, Glen Eden and Mangere, to view homes which she said had been built for NZ$300,000 including land, house, and development costs, were of quality, and were affordable.
"If not, why should New Zealanders believe the government that the only place that you can build a NZ$300,000 house is in Lumsden?" King asked.
Heatley said he had visited sites in those areas during the last few years.
"I think what the public question, Mr Speaker, is that you can build 100,000 houses in ten years. That's one house every hour, 24 hours a day, seven days a week, for ten years, and still be 13,000 houses short. That's what that party thinks Housing New Zealand is going to do," Heatley said.
At this point, Prime Minister John Key stood to ask Heatley a supplementary question.
"If it is so possible for houses to be built for NZ$300,000 in Auckland, un-subsidised, why isn't it happening today, and why would the government need to get involved? The answer is, it's not," Key said to cheers from Labour Party MPs.
Heatley said it was because builders and developers had advised the National Party that, "when they sell a property, people expect to buy the house, and the land. Not just the house."
24 x 365 x 10
Finishing off the session, Labour Party finance spokesman David Parker decided to question Heatley's figures.
"I would ask, Mr Speaker, whether the Minister checked his arithmetic coming to the House. Because by my reckoning, if there was going to be one house built every hour, for every hour of the day, seven days a week for ten years, there would be a build of 613,000 houses, not the 100,000 houses that the Labour Party says we're going to build," Parker said.
Parker now probably wishes he hadn't brought it up. Heatley said he supposed the press gallery would go and determine who was correct.
There are potentially two answers, given the way Heatley worded the equation:
Twenty-four houses built every day over ten years (and excluding any leap years - 24 x 365 x 10) gives 87,600 houses. About 13,000 short of what Labour was proposing, and in line with Heatley's math.
Another way of doing it would give 87,360 houses: 1 x 24 x 7 x 52 x 10. Pretty much the same.
Either way, quite a bit off Parker's 613,000.