The political destruction of NZ’s residential construction sector in one graph
Study the graph below comparing the rates at which houses are being built in Australia and New Zealand, and see how the politicians and urban planners have decimated the residential construction sector in New Zealand these past 30 years.
Chart kindly supplied by Leith van Onselen (aka the Unconventional Economist)
The measure employed is the “build rate per 1000 population,” which of course appropriately factors in population changes over time.
It illustrates just what a truly massive hole this country has to dig itself out of since the industry began being bureaucratically bludgeoned back in to the Stone Age of cottage building.
It illustrates too just how incompetent the industry and professional groups have been these past few decades—more interested in political boot licking than being socially responsible.
“Crony Capitalism” has been the game—collusion between professional groups and government, and between industry and government, collusion that has reduced supply and pushed up prices with massive costs in human terms and the wider economy.
The Law Society, Real Estate Institute, Planning Institute, Property Management Institute, Resource Management Law Association, Local Government New Zealand, New Zealand Institute of Architects and Registered Master Builders should be particularly ashamed of themselves. They need to, with urgency, take a good hard look at themselves.
Add to this the appallingly high cost of new land, high purely as a consequence of planners “ring-fencing” our cities. A piece of buildable land just inside Auckland’s ring-fenced boundaries, for example, costs around 8.7 times the same piece of land just outside the planners’ ring fence—forcing people to pay way more for housing than they otherwise would have.
Little wonder then that while new starter housing is being put in place on the fringes of the affordable United States urban markets for about $US600 per square metre all up, here in New Zealand now it is a stratospheric $NZ2,500 per square metre and more all up.
No wonder we have such elevated outwards migration to Australia. And no wonder we have a non-recovery in Christchurch, because with appalling residential consenting rates of 3 per 1000 population per annum for conventional housing it’s clear no one can afford to build.
This was explained around 2 ½ years ago in my article Houston: We Have a Housing Affordability Problem.
The problems and solutions with respect to Christchurch housing have been set out in my article Christchurch: The Way Forward.
The initial reforms by the New Zealand Government to be announced mid-to-late October (they were supposed to get on to this out of the starting blocks straight after the 2008 election, but that’s another story) must, as those articles make clear, focus on land supply and appropriate infrastructure financing.
Hugh Pavletich is a Christchurch entrepreneur, the owner of website Performance Urban Planning and the co-author of the Annual Demographia International Housing Affordability Survey, 2011.