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Janine Starks deconstructs insurer's policies regarding the role for and payment of architects for Chch home rebuilds.Your experience?

17th Nov 11, 4:29pm by Janine Starks

<p> Norman Foster designed building</p>

By Janine Starks*

There has been a lot of talk in Christchurch about the future design and rebuild of the city.

Getting the right architectural ideas for buildings, public spaces and landscapes is a hot topic, but a city is not just made up of a Central Business District. Its character and its architecture stretches out to the suburbs and the places we go home to. While the CBD is attracting much architectural debate, very little is being said about the design of our homes.

One reason could be that not all insurance companies have formed agreements with registered architects about the role they will play with residential homes and the fees they can charge. There is discontent brewing that some insurers want fees to drop to the levels charged by designers – that’s around 5 percent rather than 9 to 12 percent of the value of the home.

At the moment it seems there is a stand-off and registered architects are sticking to their guns and want to be paid in their full professional capacity. Most insurers have appointed project managers (such as Mainzeal, Hawkins and Arrow) to handle rebuilds. But this is probably where some of the contention lies. These companies are rumoured to take a cut of 3 to 4 percent to manage a project which an Architect should see through to completion.

If insurers can push their fees down, then the combination would be no more than a full-service architect. With many insurance policies clearly entitling customers to ‘architects fees’, it certainly seems unfair if homeowners are directed to designers instead. Since only registered architects can call themselves an ‘architect’, and policy documents refer to ‘architects fees’, it seems hard to see how there could be an issue. Their charges have never been a secret and insurers could hardly claim they didn’t know where the standard levels sit.

Nor can they claim they were unaware that an architect provides a ‘full-service’ from concepts to drawings and tendering to account management. What role that leaves for these project management companies, should perhaps be the real question.

To quote one Canterbury architect I met recently: “If people think they won’t see package homes all over the Port Hills of Christchurch, they should think again”.

Are you entitled to use an architect?

Architects should and could play a vital role in the rebuild of homes in Christchurch. But they can only make an impact if we engage them.

Whether they are engaged will largely depend on how the fine-print is written in your insurer’s policy document. As so few people ever read this, let alone keep a copy of it in their filing cabinet, it’s no wonder there is confusion.

One of the most valuable tips you should follow is to check out the clause about ‘professional costs’ in your policy. If you don’t have a copy, call your insurer and ask them to post or email you one.

Here is an example of two different policy wordings:

AMP (Vero): “We will pay architects, surveyors, consultants, legal and council fees, incurred with our prior consent required to enable the reinstatement or repair of your home”.

State (IAG): “The following costs, as long as they were necessarily and reasonably incurred: architects’, engineers’, surveyors’, building consultants’, legal and council fees”.

The AMP wording simply states these fees will be paid. To my mind, it’s a pretty clear statement and their customers should be entitled to use an architect to prepare a design, full drawings and carry out the usual range of functions a full-service agreement would entail. There just seems to be a fairly normal clause reminding you that you can’t charge off and incur these costs, before they approve them.

The State wording is a little different and says the fees must be necessary. State confirmed to me that they felt if the home wasn’t architecturally designed in the first place, the fees would not be approved. It will all come down to the wording of your contract.

If you are entitled to use an architect, their fees are paid by your insurer in addition to the replacement value of your home. Once that value is agreed, an architect can set about working to this budget. Remember, an architect should not be viewed as a fancy-pants luxury for the wealthy. They have spent their careers managing projects and ensuring homes fit families and their surroundings.

Allowances for their fees have been embedded in insurance policies to help you, so don’t be afraid to ask for their services. To learn more, a good website to look at is www.talktoanarchitect.co.nz

I prefer drawing to talking…

Love him or hate him, the famous 20th century architect Le Corbusier, certainly has a point when he says “I prefer drawing to talking. Drawing is faster and leaves less room for lies”.

Most of us can relate to that – a drawing is what it is and words cannot change it. That’s why it’s important to do your research, view websites and look at the previous work of an architect. The pictures don’t lie and you’ll soon get a feel for whether the person and their style make a good fit with your family. When we decide the look and feel of our city or our homes, it’s becoming obvious that the traditionalists and modernists will need to try and co-exist together. High hopes perhaps. But if the Prince of Wales and Norman Foster can co-exist in Great Britain, anything is possible.

They may be polar opposites, but their beliefs come together in one important area; sustainability. Perhaps we might find that same common ground in Christchurch.

Email questions to starkadvice@gmail.com, subject line: Financial Agony Aunt. Anonymity is guaranteed.

*Janine Starks is Co-Managing Director of Liontamer Investments. Opinions in this column represent her personal views and are not made on behalf of Liontamer. These opinions are general in nature and are not a recommendation, opinion or guidance to any individuals in relation to acquiring or disposing of a financial product. Readers should not rely on these opinions and should always seek specific independent financial advice appropriate to their own individual circumstances.

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40 Comments

by iconoclast | 17th Nov 11, 8:23pm 1321514630

Individual builders/architects can't compete with the buying power of the supermarket builder. Here is an example of a "production builder". Sausage factories or Supermarket Housing

One of the bigger ones

http://simonds.com.au/

A list of House and Land packages

http://simonds.com.au/house-and-land.php

House and Land Package, 8th one down $275,000 17.7 squares or about 177 sq/m

http://simonds.com.au/package.php?pid=62253

by Chris_J | 18th Nov 11, 9:16am 1321560985

If only they'd employed one competent designer or architect! Their plans contain the typical large amounts of inefficiently used space, a lack of sun and views from rooms (except towards boundary fences) and the typical oversize designs to make up for the inadequacies.

Well designed homes with pleasant functional internal spaces, that relate to the outdoors and the sun, cost no more to build. Frilly add ons to the facade hardly disguise the inadequacy of these types of homes. Unfortunately most spec builders don't want to spend too long thinking about these issues. (Hugh doesn't seem too?). The fact is a well designed 120m2 (excl gge) 3 bedroom house can be spacious and comfortable yet many spec builders design 150m2 3 bedroom houses that feel pokey and unlivable - in that size a you can fit a 4 bedroom, 2 bathroom, 2/3 living area home that feels warm and inviting - but only if they had employed an architect or a competent designer!

by scarfie | 18th Nov 11, 10:16am 1321564609

Well said Chris.

Something also to be contemplated in response to your comments, including the one below, is craftsmanship ie: we don't have it anymore.

The division of labour might be alright for producing soul less housing for low cost, but there is also a cost to that labour. Work that is soul less will produce a matching result.

by Chris_J | 18th Nov 11, 8:49am 1321559383

Hugh, not to engage in debate about the same issues again ... but, remember anyone with an insurance rebuild likely already owns land, and if you are red zoned, the opportunity is there to acquire land from someone who doesn't want to rebuild in a green zone (at a similar price to most Govt payouts). So section price isn't really an issue, as we don't exactly expect the population to increase and there will be plenty of mugs putting in hard-to-move subdivisions (and losing money) because they have some deluded belief there will be hyper demand for land - of course highly unlikely.

Architects or at least competent architectural designers add enormous value to a project. The number of spec builds (self designed by owner or builder) that have flaws so obvious to buyers - which make them very hard to sell - is extremely high.

My view is that a well designed development/building can add 20% or much more in value and in many cases reduce costs 10 or 20% too. So in terms of profit the addition of a skilled designer is invaluable.

As I've asked previously Hugh, if you believe construction costs (and quality of buildings) can be significantly improved by your ideas, then why do you not give us your formula for doing so Hugh?

Remember this is not about land or regulation (as in ChCh most people that need houses to be built already have a section or close to current market value of an alternate section), it's simply about how you intend to get the $150k houses you talk about and how they are going to be superior to what you can do today for that price.

Simply tell us the answers (if you know them), instead of constantly screaming unfounded slogans.

by PhilBest | 18th Nov 11, 5:25pm 1321590351

I recently read "From Bauhaus to Our House" by Tom Wolfe - a satirical history of modern architecture.

He says repeatedly ".....and the clients just kept on taking it......."

In fact, possibly every chapter of the book ends in those words.

".....and the clients just kept on taking it......."

by scarfie | 17th Nov 11, 10:33pm 1321522393

The paramount piece of advice for anyone in the market to build is to get yourself a book from the library titled "A Timeless Way of Building" by Chrisopher Alexander.

Or better still buy it from Amazon, along with part 2, "A Pattern Language". A miniscule investment in the cost of the project.

Once you have read that you will see that most professionals in the building industry are deficient.

As a prospective Archictect that has already designed and built (all of it including plumbing and electrical) my own house, I am disappointed with the state of the Architectural profession. This is only exceeded by my disappointment with the general state of housing and urban design provided by the 'supermarket' builders as Iconoclast states.

Good design should be egoless, and it is my opinion that an Architect with good construction knowledge should be able to save you his fees with his design and management.

by steven | 18th Nov 11, 7:15am 1321553753

Good....wait.....sorry architects with good construction knowledge? honesty I worked in enginering consulting for 4+ years out here (20 years in UK) and never met one......the architects I met just looked at space and colour......examples are numerous....one I remember distinctly was argueing for a concrete roof on a passively cooled multistory building that I was consulting on......I also spec'd 75mm BASF insulation minimum (would have prefered 100mm but that was a flat "no" on cost)...the architect took that out, didnt tell me and when the builder mentioned it said I could have 75mm concrete instead....another huge argument, ....then there was the open plan design that made pasive cooling work being segmented into rooms that killed it dead......or replacing my 2000mm x 500mm vents with auto control with 25pa resistantance vents (25pa) followed this was a NZ leading award winning architect (who was one of teh top honchoes in NZ who said he would ensure I never worked in NZ again........the guy was a F*ck wit....he's designed houses this was his first passively cooled build which he ruined.......now I do computers.....but i earn more and deal with fewer assh*les.

regards

by scarfie | 18th Nov 11, 10:23am 1321564988

There are a couple I have met that seem to have a few clues, but sometimes I look at the profession with dispair. As I have said before there are structural issues with the training. Not a good look when the student knows more than the lecturer. Lol. I didn't turn up for any lectures on one technology paper and only missed an A+ by 0.7%.

I would love to know who that Architect was. To PM me get my details from Walter or Murray.

by iconoclast | 18th Nov 11, 11:28am 1321568887

Scarfie: Can you give an indication of Architects fees for (a) design only, and (b) design and manage

by scarfie | 18th Nov 11, 12:01pm 1321570863

I can't really give an accurate answer as I have not done that paper yet. Not sure I want to know either. Lol.

I would say you could extrapolate from the figures in the Article, with the 3-4% being subtracted from the 9-12%. The range being based on the reputation of the Architect. Worth noting in that calculation that at some point you will have to pay draftsman fees, even if built into the price of a supermarket house.

But that is all a bit too simplistic because not every concept drawn up by an Architect will translate to a commission to build. In fact I would say less than half, perhaps even way less.

It is quite hard for an Architect, because so much mental energy can be expended into the concept, but it usually pays the lowest portion of the total commission. I have noticed that some Architects I know have the option of being engaged on an hourly rate.

I will push this a bit further for you Iconoclast, if it is of any use, and say it would be worth relating the fees to other registered professionals. Say lawyers who IMO get too much, or Engineers that don't get enough. It is also worth noting that five years of tertiary study is required, with minimum grades required for acceptance to the last two years. The course of study is intense and according to fellow students who would know, if you want an easy degree then go become a doctor. There is then another three years of ticking the boxes in workplace experience before being able to apply for registration.

Worth considering that you have to live in your house everyday. On that note more Architects should be involved in workplace design. Don't underestimate the impact that your built environment can have on your physical and psychological well being, a particular interest of mine.

PS. Of the 2000 hours in a work year, I do them in 24 weeks that covers the Academic year excluding the exam weeks. Hard yakka for an old fella with other responsibilities!

by bob | 18th Nov 11, 1:50pm 1321577458

Googling "NZIA fees" gets this old NZIA brochure:

http://www.emarchitects.co.nz/webfiles/EaglenMaingay/files/guide_to_arch_charges.pdf

...which seems about right (everything plus GST of course) and as per the article.

You'd expect this to be split down into something like 25% sketch design/resource consent, 45% documentation and 30% management.

HOWEVER it must be noted that for most New Zealanders it is an abomonation to pay money to have a house designed (of course if buying a car they a willing to pay an enourmous premium for something percieved as having more research and design - but a house is a much bigger investment so it's important that it has minimal intellegence in it's design)

This conundrum is easily solved. You can get rid of the management fee by employing a project manager or builder who can offset this fee by ''value managing' cost away, substituting cheaper stuff that looks the same. For example in the 90's a PM or builder would notice unneccesary items like treated timber which could be substituted for, say, untreated timber thus justifying their fee (or increasing their margin...).

Also at the end of the day the goal is a CCC - NOT a finished weathertight building in accordance with the contract. This is a process that involves getting expensive Council inspections so why would you want to pay for someone else to inspect construction when you're already paying Council to do it? (and they do such a great job). incidentally NZ is one of the only places that has this faulty system where Councils inspect, not the people who designed it and know it best.

Design fees are also easily reduced by either having them built in to an overall building contract so you don't know you've paid them or finding someone willing to do a crap job for cheap. Of course this will mean you are paying more on construction, building inefficient, sunless and unnesccessary floor space at $1500 or so a sqm, but the important thing is that you don't know this.

If you look at the most successful developers you will notice that they use the most expensive Architects because they understand that paying 5x more for design reduces overall project cost. However most NZ'ers know better.

by scarfie | 17th Nov 11, 10:34pm 1321522459

I should add that as much as I am disapointed with the Architectural profession, you should still find your living environment greatly enhanced by engaging one:)

by bob | 18th Nov 11, 10:39am 1321565970

Presumably the Christchurch issue is that that the project Managers want the fees and the control over the projects while wanting the Architects to take reduced fees for doing the work and taking full responsibilty/legal liability for the project Managers decisions?

by Bruce | 18th Nov 11, 11:41am 1321569692

Well I don't understand the author's fuss. An Architect (or Designer for that matter) has the function to design the house, draw the plan so a builder can build it, get the consents and, only if required by the owner, supervise the construction. If as indicated the construction firms are managing these rebuilds then the latter does not apply as those firms will be doing that.

Further as the house is to be rebuit virtually as it was then you don't need someone to "design" something [different] because the obligation is to reinstate to a standard no more extensive nor better than new. Which means to me you just need someone to draw up plans to put a building back as it was before and I suppose in a lot of cases there will already be original plans available? If owner wants something quite different as I probably would I can see that the insurer would say I can pay the extra design costs myself, ie the creative bit.

I guess it could be somewhat different with commercial buildings as current codes will be different or may be different especially with design strength, construction materials and that sort of thing.

by bob | 18th Nov 11, 1:55pm 1321577707

If you think you can give any construction firm a set of contract documents and expect to come back months later and have a building that has been built in accordance with those documents...

by Chris_J | 18th Nov 11, 11:14pm 1321611251

Hugh, I'm more than a little bemused by you belligerent comments.

Architects and skilled designers are vital and should be used more not less.

In regards Fulton Hogan's project, it is entirely inappropriate to site a subdivision on a liquefaction prone site that suffered considerably in the September 4 event. Houses on adjoining sites are write offs, yet their site is deemed suitable? It demonstrates CERA's incompetence more than anything else.

There is plenty of land proposed for subdivisions, however rezoning won't reduce prices significantly due to increased development costs (especially in terms of geo technical and earthquake engineering).

Who exactly is building 200m2 homes for 215k? Most of the big building companies are charging around $260k for their low spec 200m2 all completed. I know the owner of one of the largest franchise builders in ChCh very well, and that's certainly not the price they are able to build for.

It's nonsense to suggest that packages at $200-250k are possible now or any time soon.

You clearly have no grasp of current construction costs, labour rates or the property market at all, especially if you believe simply allowing rezoning will reduce section prices significantly. Most of the costs that go into new sections are increasing, while raw land costs are only a tiny part of the final cost.

You must either be in complete denial or simply going senile with your comments.

You profess great knowledge and experience in property development, so I ask how many properties have you developed in your career? How many residential properties have you directly built? And how much did you make from developing that property?

It seems very strange that you profess that $200k starter homes are possible, however 20 years ago in 1991 a 200m2 new home cost nearly that amount or more if in a decent suburb!

You really need to get realistic if want to have any credibility, otherwise you may as well join the cohorts of loony political candidates who barely scrap together a few dozen votes on the bottom of the ballot papers (perhaps you'd get along with Michael Hanson of the "Economic Euthenics")

by Andrew R | 19th Nov 11, 10:11am 1321650687

Hugh I am impressed with your consistent message: I am the way the only way and the true way. Absolute. Black and white.

I think though that it is way more complicated with way more factors than your develop cheap land on the fringes mantra.

For example: What is the role, in the cost of housing, of finance, bubbles, fashion? Should developers internalise all their costs or pass on some (espeically infrastructure costs on to everyone else to subsidise)? What cost good design?

And yes I have read your stuff on your webpage.

by Th3 | 18th Nov 11, 8:18pm 1321600726

9 - 12 percent. Tell em he's dreaming.

by Andrew R | 26th Nov 11, 7:54pm 1322290459

Maybe household incomes have dropped in real terms? but houses haven't? It could be related to the new right agenda transferring wealth to the top. (Which isn't the same as a lack of cheap land.)

by waymad | 20th Nov 11, 8:01pm 1321772484

Mist42nz: let's count some of the overheads and costs that simply did not exist say 20 years ago.

- Develpment Contributions on the land, demanded by Councils at the pre-subdivision-existence stage. These can run (in Chch) $70K per section (pers.comm from a major subdivision's legal eagle). Never used to happen: some Reserrve land or modest $ for green space somewheres, was the extent of it.

- scaffolding to do any work over 2.4m high. This can run 33% of a re-roof e.g. $7k each for materials, labour, and scaffolding. Never used to happen: long ladders and a head for heights were the go.

- certification of all power tools, annually. Never used to happen: and anyone who used one of them old Wolf or Desoutter appliances in the rain certainly used to get the odd survivable tingle. Strengthened the character.

- licensing of tradies. Now any soul who can stump up the fee and remember the multi-choices can be a 'licensed professional'. Never used to happen: local reputation sorted the cowboys from the pros.

- fencing of sites. See Scaffolding, above. Count the cost...

- widespread use of Codes. Simply encourages building down to the Code, not up to a craftsman's standard. See that old hippe Stewart Brand on this topic, in 'How Buildings Learn'. He's positively vitriolic. And as Chch is busy discovering, Codes are good only for a static type of test (how much does this beam deflect with 1000kg in its middle? Totally useless for the 'how well has this structure survived quake#9073" (tonight's number).

Enough? I could go on, but there's a cuppa waiting.

by Chris_J | 21st Nov 11, 4:28pm 1321846122

Hugh,

A number of points,

First I said I studied architecture (Victoria), I'm not an architect. I currently am occupied as a property developer.

Second, which building company in ChCh will build a completed house everything finished and ready to go (no extras) for $215k for 200m2? (I assume this is on land that needs no extra foundations too).

Thirdly, you are in absolute dreamland if you believe that a flat rural land should be worth the same on the fringe of a city as it is in a god-forsaken mountain valley up 30km of gravel roads?

A 200ha rural block of good flat land (not dairying just bare arable land) with water on the plains 150km from ChCh can sell for $20,000/ha plus GST. 2,4 or even 10ha blocks on the fringe of the city will NEVER be at that price level.

Use some logic for once Hugh, if an 800m2 section is worth $50,000, is the 1.2ha block next door worth $12,000 - $48,000??? (As opposed to it's market value as a lifestyle block today at $300-500k depending on location). Well it would have to be if your numbers stack up Hugh!

Most of the city area is surrounded by smaller blocks (many of which were subdivided as small holdings in the late 19th or early 20th Century). There are occaisonal larger blocks too, but they are generally in less arable areas or in flood plains etc.

A long way out land does approach rural value but we are talking distance of 15km+ from the city boundary (Rolleston etc).

Consider that large scale residential land might sell for $30k per site today, getting prices down to even $10k per site which is ambitious, would only cut $20,000 off each lot.

How does that reduce prices from $180,000+ per lot to $50,000?

It doesn't.

Then what is Hugh talking about?

Absolute nonsense.

His pricing, would require - no developer margin, no council fees, all infrastructure upgrades paid by existing ratepayers or taxpayers, a near zero raw land cost and throw in a whole lotta dreamin'.

Hugh you need to get real. Your nonsense is just embarassing.

Think about this logically.

Many of the fringe blocks average 4ha say and they included a quality, highly desirable house. Market value for that zoned rural is say $1.2m.

Now consider it is rezoned to allow 800m2 sections.

There's a large house on the property now, realistically it needs to be left on 2000m2 to retain much of it's value. The balance of the property could provide say 32 sections (allowing reserves and roads). The property say was a standard 100m x 400m block. So it requires 350m of road built. It also requires 100m of existing road frontage upgraded.

There are no services in the road and the nearest mains are 1km away.

Look at the costs (incl GST):

Property: $1.2m

Road and services within development and minor engineering works: $1m

Share in upgrading local services to get town services to boundary (pumping stations, mains, roads etc etc) $400,000.

Professional fees $200,000

Development contributions $600,000

Contingency $200,000

Total: $3.6m

Allowance for interest at 8%PA for 3 years (on GST excl amount). (1 year planning (land cost only), 2 years holding (total cost)) approx $600k.

Total cost $4.2m

Profit:

Must be 20% of outlay to be even remotely considered.

Revenue:

1 house on 2000m2 $700,000

32 sections at price 'x'

So required revenue is $5.04m net of 5% sales expenses (fees, conveyancing, advertising). Hence required revenue is $5.3m

Hence 32 sections must generate $4.6m.

Hence section price must be $144,000

Therefore an appropriate initial marketing price off plan (with a tight negotiating margin) might be $149,000 but a "once completed price" would need to be targeted at $165,000 with about a 10%+ negotiating margin.

To get these sections to the market at $50,000 (which would imply that the existing house was perhaps only worth $500,000), then total revenue would be just (less 5% selling fees) would be just $2m.

Even if the whole property was worth just $700k (half a million less than reality), then taking off profit margins and holding costs, total costs to develop couldn't exceed about $700k - just how could that be possible Hugh??

In the current market, a 10 acre block on the edge of the city zoned residential with a good house wouldn't sell for as little as $1.2m. This would require large areas to be rezoned (and prices of that land not to increase) for this whole scenario to become possible.

This is why Hugh is talking nonsense and wasting everyone's time.

Mass rezoning at best would create sections around the $150k level unless development contributions and infrastructure upgrades were not paid by the developer (in which case $120k sections might be possible).

by Chris_J | 21st Nov 11, 4:36pm 1321846598

Hugh note that in my scenario, the raw land cost is $125k/ha, which is very low.

Can you list the developments you have done Hugh and the number of residential sections you have ever created?

You really need first hand experience to know how difficult the property development and construction business is.

by Andrew R | 26th Nov 11, 8:02pm 1322290935

all this (other than roading and footpaths) should be bond financed

Hugh you have to account for the cost of paying for the bind financing per house as well if you want to be accurate about the cost of housing.

And I don't see where you inlcude the costs associated with location, connectivity with the rest of the city/town, and servicing/transport to address peak oil and climate change.

by Andrew R | 27th Nov 11, 2:02pm 1322355731

Thanks Hiugh. I have read your stuff and don't find it that helpful in terms of showing the level of cross subsidy and hidden costs there are with your solution.

by Chris_J | 21st Nov 11, 10:42pm 1321868571

Hugh, I'm 33 and have been directly developing and investing in property for over 15 years (since I was 17). Indirectly I've been involved in property since 1988.

We certainly aren't broke. (Once insurance on our destroyed properties is sorted we will be mortgage free, while still owning a 15 properties in other cities (incl 3ha of residential land in Dunedin), and 31 properties in Christchurch (25 buildings, 6 vacant sites) including over 1ha of inner city L3 land, 4 properties in the 4 aves and 2 in Fendalton).

I'm not quite sure how you think working on realistic costs would make one go broke?

The biggest downfall of developers is being unrealistic on what costs will be. That is how developers go broke, not the reverse. In the past I have made the mistake of underestimating costs - although that only cost me the profit, not my capital.

The biggest lesson for a developer is to be realistic.

Because you are so unrealistic, I know you are no serious experienced developer.

In fact as I've mentioned before, a quick search of LINZ's database reveals that you haven't owned any property in your own name since the register was computerised (which started way back in 2001 although took about 3 years to be fully operational), and over the same period your only recent registered company has only owned (leasehold?) property in Greymouth.

No disrespect but I haven't heard your name mentioned in residential circles (except in regards demographia).

Now my numbers are very realistic. When was the last time you actually did major construction works? I can't understand how you can profess numbers that just aren't realistic.

You could just let me know what projects you developed. Obviously I'm not going to ask around, I'm asking you! Because if I were to ask around it would be something along the lines:

"what do you think of that Pavletich and his silly $50,000 sections?"

by steven | 22nd Nov 11, 8:36am 1321904184

"The logic being that those who own the infrastructure should be responsible for its equity and debt financing - and charge rates / fees for its use."

Then the logic is faulty, such a proposal is indeed inter-generationally in-equal....older rate payers and especially OAPS etc are being asked to cover costs that they are not incurring, they cannot afford that and indeed make no profit on it but end up with risk. So I fail to see why as an existing rate payer I am liable for new infrastructure to supply new houses....bonds are a liability that in effect are forced on me for no advantage to me. On the other hand having the developer and the new house owner pick up the installation costs is by far the fairest way, they want the housing and the profit they meet all the costs up front. Once its in, sure the extra rates taken in should cover the maintenance of the new infrastructure....

I agree with point (5) I see nothing to indicate that housing isnt a bubble and can be maintained.....Peak oil if nothing else will deflate it.....but the debt I think will pop it first. Which of course will solve the problem of sections being over-priced....

I find it very funny when you say "The old order is dead in the water" and suggest that other read the tea leaves, yet you are unable to do so yourself. So indeed it is, peak oil makes the entire math / economics of doing lots of things the old way obsolete/historic.....and that includes housing and its value.

regards

by Chris_J | 22nd Nov 11, 1:01pm 1321920098

Hugh, I'm not going to sap my energy debating the issue with you but the reality is you don't have experience in either residential building or construction and you are out of touch with costs and clearly unaware that advertised prices for building companies to build a house is not the actual total price of all costs involved in turning a vacant lot into a house.

I still would like to know who in ChCh can build a $215k 200m2 house all complete.

Milestone homes (one of the really budget builders) list this basic house as $1150-1200/m2 and there is at least $100/m2 in extras needed to actually get a completed property (landscaping, engineering reports, site works, drives, curtains, council fees).

http://milestonehomes.co.nz/find-your-home/milestone-home/yorkstone-two…

$1300/m2 is a realistic all in price for a 200m2 home. $1200 or less is possible, but I don't think any production builders in ChCh offer building at that level.

I know there are efficiencies that can bring the price down a little, but no one is prepared to build significantly different from those price levels at the moment.

Christchurch housing is not a bubble. It is significantly cheaper to buy existing than build. There is a massive shortage of existing houses and even if 60,000 people leave (perhaps 25,000 have left already according to the latest phone book (down 10,000 households)) there will still be more households than undamaged houses for them.

Multiples are absolute nonsense, dreamed up by non-thinkers. The reality that all desirable parts of the world have higher multiples than less desirable areas is overlooked. The fact that interest rate environments are not considered is nonsense. There is a massive difference in affordability between 1980s double digit interest rate years and during the last decade and a half.

Look at Christchurch the median house is low $300s, 2 people working fulltime on the average wage earn $112,000. That hardly makes housing unaffordable, when a 90% loan would cost $16kPA

Look at east ChCh the median is about $220k (and has been around that for almost 5 years).

http://apps.reinz.co.nz/reportingapp/default.aspx?RFOPTION=Report&RFCOD…

2 people on the minimum wage earn $54kPA. 2 people on just $17.50 per hour earn $73kPA or one third of the median house price.

The fact is that working people don't find housing particularly unaffordable, especially with low interest rates.

Enough said.

Hugh, you don't know current construction costs, you have no residential experience, you don't understand housing demand and you obviously have no idea how to make money out of property.

If you knew any of the above you would lead by example not by preaching.

by Chris_J | 22nd Nov 11, 11:51pm 1321959071

Hugh, I mean no disrespect. And from previous comments I've made you will be aware that I support many of the changes you suggest.

HOWEVER if you put forward an argument publicly it must be realistic and the numbers need to add up.

I've given you a lot of evidence that some of the numbers you suggest just aren't realistic, and although you may be coming round to reality on some numbers you are still miles away on where land prices could be.

I didn't say that I thought ChCh was as afforable as it could be, but current prices don't make houses unaffordable. Christchurch property is incredibly cheap compared to other Australasian cities.

I also never said construction costs couldn't be cut. Better efficient designs would greatly improve quality and better construction methods could cut costs, just not by the amounts you suggest, unless there is a big reduction in what is included.

The critical points to reduce section costs are:

Reforming development contributions - scrapping them would be nice but realisticly cutting revenue to zero in current economic conditions is not likely. Hence making them fair is probably the best we can hope for so for instance in ChCh subdividing a $100,000 section doesn't cost $30k in DCs and subdividing a $1m house site won't only cost $20k DCs.

Fixing the RMA so minor non compliances don't stymie development. Realistic rezoning is also key.

In my view, having some other entity own the wastewater pipelines or similar and charging for their use on the basis that they own the lines and you pay via your utility bill isn't a good solution.

In regards using a non de plume, I don't have an aversion to raising these issues publicly, but this is only an internet forum and I'm only responding to your claims that you have raised on a direct basis with you.

We have a couple of small residential projects (just individual houses) that we are looking to start early next year. I of course will be spending my money as carefully as possible to get a quality but affordable product and will happily introduce myself and show you the project and costings etc as they get more advanced. This will prove to you just how expensive construction costs are.

by Matt in Auck | 21st Nov 11, 7:51pm 1321858270

Look, both architect-designed housing AND production housing have their place. Personally, I find many production houses artless, inefficient and wasteful, and conversely good architecturally designed houses artful and elegant, and efficient. But that doesn't mean I slam production housing, because many people like them and they are usually quicker and easier and cheaper - I can understand their appeal.

As Chris suggests, a well designed 120 sq. m house (ex garage) can absolutely work wonderfully, as in fact can a 100 sq.m house. My parents have a beautfully designed 3 bed town house, circa 120 sq. m (plus 20 sq.m single garage). It feels spacious, and has beautiful spaces. Living in it really is soul enhancing (and as my parents have recently retired that makes a big difference since they spend a lot more time in the house now). You don't get that with most production houses. Sorry. And call me romantic, but don't we as humans crave some beauty and elegance in our lives, as opposed to just being robots leaving in dull, beauty-less boxes?

by scarfie | 21st Nov 11, 8:52pm 1321861963

What most people don't understand is why the example you cite for you parents is better.

I was fortunate to get this information from an elective paper I did over and above the standard curriculum. I got it straight away.

http://www.livingneighborhoods.org/ht-0/fifteen.htm

and a link with the text from the original book.

When you understand this then you can see why I am discouraged at the Architectural profession, they have limited themselve to surface and mass as FLW would say. Sadly there is no alternative if you want a half decent house.

by Matt in Auck | 21st Nov 11, 10:37pm 1321868223

Nice link scarfie. Have you watched "grand designs"? I watched it tonight. It's reasonable tv but a couple of things in it really bug me. First, most of the architecture in it is not actually very good. Secondly the host (forgot his name) goes on and on about green design on these usually huge monstrosities. Huge houses equal sustainable????? Hmmmmmm

by scarfie | 21st Nov 11, 10:52pm 1321869128

God don't get me started. Lol. Lets say we are on the same wavelength there.

Did you see Amanda's link the other day? Thats getting pretty green, although could use some passive solar.

Where I see a big hole in Architecture is to apply the 15 principles to get genuine green houses that look and feel great.

by scarfie | 21st Nov 11, 10:57pm 1321869459

I have met this guy and his work looks pretty good. A bit eclectic perhaps, but still attractive. His own house is an old bungalow that he has added on to at the rear with a mix of earth and timber. Really quite a delightful space, and on a rural block surrounded by gardens and orchard.

by Chris_J | 21st Nov 11, 10:57pm 1321869463

MIA, I thought you were in Adelaide now? If you were referring to the Living Channel episode screened in NZ which was that appalling Chapel conversion, I agree with Kevin McCloud that that conversion was not good (possibly the worst in any series of the program), I think he was making the point that it's redeeming feature was that it reused a building that would have otherwise been lost (ie that was the sustainability). The vandalism of that Chapel was so awful I didn't watch more than the first five minutes of tonight's rerun.

by Matt in Auck | 21st Nov 11, 11:14pm 1321870487

Yep in Adelaide, different episode. He was praising a monstrosity

by steven | 22nd Nov 11, 8:41am 1321904483

I have a production style 120~130sqm (typical 1950~60s layout) house......I find it very space efficient, easy to get on with and low cost to maintain. Just look at the architect designed leaky homes.....bloody awful to look at, poor space use and horrendious maintenance problems......so I guess beauty is in the eye of the beholder.

regards

by David B | 22nd Nov 11, 12:21am 1321874510

I would love architects’ to be involved in the design of the rebuild of Christchurch. But just as not all artists are GREAT artists, and not all art is GREAT art, not all architecture is great. In fact some of it is downright crap. My worry would be a lot of New Zilland architects would get on board and design a lot of square boxes with flat roofs, weatherboards, big windows, large and empty open plan living spaces, and everyone would go ohhh and ahhhh, and no-one will hear the kid yelling out that the emperor is wearing no clothes. I mean there's a reason why New Zealand is never mentioned when it comes to great architecture you know. It's because we don't have any.

I am just amazed that there has being no effort by Christchurch to open the city up to a design competition for particular sites by some of the world’s top architects as was done by New York City with ground zero. Another missed opportunity...........

by steven | 22nd Nov 11, 9:38am 1321907902

Agree on NZ architects...if we have any good ones, Ive never met one....

Design competitions would take a long time and probably cost a lot of $.......its a nasty situation, Chch needs to be rebuilt as quickly as possible or it will cease to be a viable city...if that hasnt happened already...

regards

by iconoclast | 22nd Nov 11, 9:59am 1321909178

David B .. From my experience .. the problem for architects is they are the filling in the sandwich .. the primary influencers at the front-end are the "production builders" (I prefer supermarket housing) and at the back-end are the home-owners who commission the architects, directing them what they want. The only way the arhitects profession could really exercise influence and compete is if they grouped together, bought an entire subdivision and designed away .. but that aint never going to happen. They could collaborate and fund one-off houses .. as show homes .. do they have that fore-sight? (I'm talking about residential housing not commercial buildings)

by iconoclast | 22nd Nov 11, 9:38am 1321907882

Currently in Auckland. Searching for a property. Picked up an over-the-top glossy 275 page "Property Press" North Shore publication. Nearly 80% of all the properties presented are two storied which means they exceed 20 sqm of living space. The remainder that are single level are 30+ sqm over-sized, over-capitalised palaces at ridiculous prices.