Shearer on NZ$300,000 houses: 'It can be done'; Plus, will Labour also commit to more state homes? "There's a possib— Well, look, I’m not going to go there now"

Shearer on NZ$300,000 houses: 'It can be done'; Plus, will Labour also commit to more state homes? "There's a possib— Well, look, I’m not going to go there now"

By Alex Tarrant

Labour Party leader David Shearer says it is possible to build 100,000 new homes over ten years at an average cost of NZ$300,000 based on figures from the Department of Building and Housing.

Shearer also appeared over the weekend to let out of the bag that Labour is considering a policy of more state house building.

On TVONE's Q&A programme on Sunday, Shearer was asked whether Labour was considering housing policy in relation to low-income earners who could not afford a deposit on a home.

"Obviously there's going to be other issues in and around that, and it’s around state housing, social housing, that sort of thing," Shearer said.

"We’ll roll out policy on that later."

Asked whether that meant more state houses could be expected, Shearer replied:

"There's a possib— Well, look, I’m not going to go there now, because that’s a policy—"

Interviewer Shane Taurima interrupted:" It sounded like you were going to say, 'It’s possible.'"

To which Shearer said: "No, no, what I will say is that part of the [KiwiBuild] housing package that we rolled out as well is about making sure that rental properties are actually up to scratch, so there's going to be a guarantee in and around rental homes."

'It can be done'

Meanwhile, on TVONE's Breakfast programme on Monday morning, Shearer said that while the average cost of building the 100,000 homes should be around NZ$300,000, some would cost more, and others less.

“You can do it. The Department of Building and Housing, which is what we based our figures on, have got the average price of houses and land sorted out, and that’s what we’ve based our figures on," Shearer said.

“Today, I’m going out to see the Housing Foundation [in Auckland], who have been doing this for some time. They are doing it for that price," he said.

“Now they are doing it without the advantages of economies of scale. So if you’re looking at 10,000 houses, obviously you’re able to get materials and all the other parts that go to make up a house that much more cheaply then you would if you were just doing 50, 60, 70, as the Housing Foundation’s doing.

“So it’s definitely doable," Shearer said.

Away from the quarter acre section

“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.

“It’s going to have to be some terraced houses, some smaller sections. They’re not big houses; we’re talking about affordable homes that people can get their first chance of owning," he said.

Who’s going to build them?

Asked where the labour would come from to physically build the 10,000 houses a year, Shearer said:

“About five years ago we were building 30,000 homes a year, and today we’re building 10,000. So there’s a lot of capacity out there.

“We’ve lost a lot of people going to Australia. We’d like to think that some of these people could come back…”

“You offer them the possibility of solid work, which they don’t have at the moment – there’s no guarantee of work. There are contractors out there that are telling us, ‘we would love to be part of this,’ because it’s a long-term building project that they would be excited about," Shearer said.

“These building contractors are excited about it because they see work guaranteed for ten years. They’re not excited necessarily because of the joy of doing this, but they’re also seeing a real possibility of building homes over a long period of time," he said.

“Homes [will be built] in the sector of the market where the market has failed. Only five percent of the homes being built at the moment are affordable. The rest of them are 2,000-2,500 square foot houses that are just too expensive for people to buy.”

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Shearer understands....votes cost promises...and dangling the prospect of a new house in front of Kiwis, paid for by other Kiwis, and unlikely to come about in the real world post an a sure fire winner...but will it win enuff votes~!
National are determined to carry on, hand in glove with the banking parasites using the creation of credit to entice Kiwi into being serfs for life. What do any of them care about property bubbles!
Building a home in NZ now invites a regulatory kicking....and if young Kiwi are silly enuff to go that far, they can expect to be taxed unto death with gst on every single thing the regulatory red tape makers demand be used in the build process by regulated builders plus gst on top.
Silly Kiwi is borrowing the parasite credit to pay Bill English the funny is that!

If the government wished to exercise it, they have quite a lot of power.
1 Compulory land aquisition at government valuation and or decree that city boundaries are shifted after they have purchased nearby farm land
2 Transit are very skilled at getting civil works executed at minimum price.  They just have to creat a specialised division of it.
3 10,000 houses per year puts quite a lot of purchasing power in their hands.  If materials cannot be supplied compedatively in NZ then at those sorts of volumes shipping from anywhere in the world becomes viable.  Faced with that option the NZ supliers would find a way. Direct purchase of materials from the manufacturer and suplied to the builders without an army of middle men clicking the ticket.
4 Tender the house construction and involve world best practice at mass production of houses.  Again these sorts of volumes offer opertunities
5 The houses do not need to be finished to a "house and garden" spec.  E.G. in a well insulated house varnished chip board floors are perfectly adequate and with young kids more serviceable.  The new owners can add the fancy bits later as their finances allow
6 Provide for some sweat equity, Painting, installing insulation, Gardening, fencing etc.
7 Remove the grossly expensive permits etc out of the hands of the Councils.  The government should be motivated to build these houses correctly and not need a policeman breathing down their neck

This is just a vote-grabbing exercise. Hopefully it would never happen as it would actually drive prices up. It doesn't solve anything.

Definitely vote-grabbing... curious about your comment that it would drive up prices though, how would that work?

Labour are effectively giving away a heap of free equity to first home buyers. With equity, you can get into more debt. Debt buys houses. Lots of new people able to get into more debt pushes prices up. I blogged about it here.

Whatever they do, it will all be far too little, far too late - guaranteed. Housing affrdability means a housing correction, and most of those consevative Labour and National voters own their own home, or have a mortgage. They don't want to see their property values go anywhere. They do not want to see a correction.
This is why we need a new "housing affordability party" that does not merely pretend to sove the problem. The renter section of NZ needs to unionise and create real political pressure to break this disgusting game that is robbing them of their right to a fair deal for their own home.
It will never come from people like Shearer or Key. 

I'm inclined to agree. Both parties seem to want to create affordable housing but without affecting the position of their homeowner voters.
You can't do one without the other, and as the saying goes, you can't make an omlette.....

good comment Andrew. It will be interesting to see what happens to the polls after labour's announcement. I'm with you that the major parties haven't wanted to do anything real. But Shearers proposal is a good start, and if he is backed by a sufficient number of national voters - young people locked out of housing - it could get very interesting

I think a little bit more questioning needs to be undertaken as to what Labour are planning. Twice in the article above Mr Shearer talks about the average cost of building being the $300k figure.
I notice that Mr Shearer refers to the Dept of Building and Housing and distinguishes between the cost of housing and land. 
Is Mr Shearer and the Labour party planning a vote winning strategy based on $300k house plus land cost? 
The proposal for the 100,000 houses built over 10 years appears to have no inflation contingency costs or interest rate changes that could affect the price over a ten year period. while Mr Shearer refers to the Dept of Building and Housing as providing the figures and identifying this proposal as doable most people know it is impossible for the figures to stay flat over a 10 year period.
Mr Shearer would be better to spend his time in dealing with the real issues of the housing shortage and dealing with the bureaucratic process that adds significantly to the cost of building and developing. As Mr shearer and his cronies don't want to address the obvious issues they obviously don't give a toss about the people who can't afford a house or those who have the means of providing affordable housing to the market. Private enterprise is fed up with bashing their heads against the thick bureaucratic walls of Government implemented BS.

I was having a beer with a mate here in Adelaide at the cricket, he's got a section around 700 square metres with one existing house, he is going to bowl it and put up 4 x 3 bedroom townhouses.
The typical price for house on full section in the area is about 400K, he's done the sums and will be able to sell the townhouses for circa 330-340K, including a 20% profit.
The reasons it works is he can get one of the bulk building companies here to build each of the 130 square metre townhouses for 150K. The cost for similar quality in NZ would be over 200K. Also, no development contributions.
In NZ the same units would need to sell for circa 430-440K, which would be hard to make work given the average full section and house is 400K
NZ simply does not have the building economies of scale. Private development will continue to struggle. This is why I support the Labour Party's scheme

Contrast Auckland. I've a friend who subdivided a section and it took him 2 years and a $100K...a nightmarishly difficult process. Auckland is broken with council misbehaving / overcharging like this

Would you do it for 20 percent profit? A lot of risk for 20%.

20% is a standard benchmark profit for developers on small low scale development. You can do it in Aus, but good luck trying to get 20% profit in most parts of Auckland. Building costs are too high  

It was quoted in another article that these $300,000 houses would be 90m2 two bedroom townhouses on a 120m2 site. So in a couple of generations we have gone from the 1,000m2 three bedroom home paradise to the 120m2 two bedroom townhouse paradise.  Michael Palin was just in the country, possible talking to Labour and the Greens about how we can become the ‘live in paper bag in middle o’ the road’ paradise.  

grant u old dog, you've gone all e.e.cummings on us!