Thursday, 4 September 2014

Labour’s Kiwibuild policy "will quickly run out of money" [updated]

Surprise, surprise, house-builders raise their arms in the air about government paying house-builders to build 100,000 houses.

Hardly even worthy of a headline. Except it got one: Labour's housing plan 'achievable,' says Master Builders.

Labour says the scheme to get the rate of new homes being built up to 200 per week is realistic and has been devised in consultation with experts in the building sector…
    Master Builders spokesperson Brendon Ward says the scheme could be a positive step towards addressing New Zealand's housing issues, as well as an exciting opportunity for the building and construction sector.

That wooshing sound you hear is the expectation of taxpayers’ money rushing into Master Builders’ accounts. That’s the “opportunity” Mr Ward is talking about.

And what about these “experts”?

Labour’s housing policy requires homes by the thousand to be built for well under $300,000 which, when sold, will provide the wherewithal for the next tranche of houses to be built for well under $300,000 which, when sold, will provide the wherewithal for the next tranche of houses to be built for well under $300,000, etc.. etc., until the next election.

Do you see the problem already? Even excluding the rocketing price of land – about which Labour pledges to do precisely nothing -- the Labour Party’s maths requires thousands for homes to be built for well under $300,000, or  as Labour’s housing spokesman Phil Twyford concedes, the Labour Party's Kiwibuild policy "will quickly run out of money."

Yet the very room full of actual experts in which Twyford made that concession – at a conference on affordable housing filled with people talking honestly rather than talking their book -- had already established that homes by the thousand, or even by the dozen, could not be built for well under $300,000 or anything like that, leaving the Labour Party's Kiwibuild policy as little more than a wet rag to wave around on the election trail that will quickly run out of money if they ever get a chance to try it.

So much for Mr Ward’s “opportunity.” But then, he cares little as long as the project’s seed money ends up in his members’ pockets.

The harsh truth is that Labour’s housing policy relies on a figure the industry can’t produce.

Square-metre costs for the very cheapest slums-of-tomorrow produced by your average builder are presently around $1450 to $1550 per square metre, plus GST. (This is a 90-130sqm house with particle-board floor, fibre-cement weatherboards, galv steel roof, el cheapo fittings.) To that you have to add the price of land.

The top-ten group home builders, who pride themselves on using efficiency, standardisation and their buying power to keep their prices down, can barely manage a home at $300,000. (Check the second left column for this years prices to May; compare them to their prices to Jun last year.)


Remember, this is house cost only. The consistently cheapest of these group house builders, Horncastle, is currently offering their cheapest house-and-land packages at Rolleston for $380,000.   The next cheapest house-and-land packages, offered by Mike Greer Homes, are $359,000 in Ashburton and $375,000 in Amberley.

You will notice that is not “well under $300,000.”

Far from it.

In Phil Twyford’s words, if these are the prices Labour is paying – and those are the very best prices available today – then the Labour Party's Kiwibuild policy "will quickly run out of money."

And these prices, these existing prices for house and land packages, are without the large wodges of taxpayers’ money being thrown around in rebuilding Christchurch and carrying out Labour’s pledge, both of which will see build prices rocketing.

These prices are for the 4,019 homes the two-ten home builders are presently building every year, on top of which Labour reckons they are going to build 10,000 more than that every year for the next ten – 27 houses per day!

And these prices are without the serious shortages of labour – around “10,000 new fully trained workers” short -- that will push up the price of every tradesman on every site in the country, and without the Greens so-called “living wage” rise that will push up the price of every labourer.

Labour’s housing plan is a fantasy.

Just as much a fantasy as the claim their capital gains tax would fix all housing bubbles – except that virtually every western country in the world apart from ours had a capital gains tax, yet every one of those places still experienced a housing bubble just like ours.

I’m surprised none of the highly-paid media team following this election have bothered to point out either of these things. The research on either is not difficult.

Far easier, I guess, just going through bloggers’ rubbish bins.

UPDATE: “Last week, spokesman Phil Twyford claimed that in some instances [Labour’s houses] would sell for as much as $125,000 less than current market prices.” How? Somehow.


  1. Brilliant, Peter. And then they have to get 10,000 building consents, each year, for ten years. That's 200 building consents each week, week after week, for ten years.

    If you believe that, then you really did come down in the last shower.

  2. Of course Labour's plan is fantasy. But how on earth did we end up were we are today? This is what should be possible:


  3. Cool Stuff ! thank for that information . i bookmarked this blog . keep updating

  4. You don't get it. It's Labour. They don't need building consents - fuck they don't even need to buy land.

    Expropriate the land from some rick pricks, overrule the council nimbys, whack up prefab terraces shipped in from China. 2-up 2-down, say around 64m^2... easy at 250K, plus another 50K given to union-affiliated building and property dev companies...

  5. Why, oh why, is this not published in the MSM? The table alone destroys Labour's myth!

  6. Nice posting, thanks for sharing with us. Your blog is great and helped me feel better knowing about paying house-builders.


1. Commenters are welcome and invited.
2. All comments are moderated. Off-topic grandstanding, spam, and gibberish will be ignored. Tu quoque will be moderated.
3. Read the post before you comment. Challenge facts, but don't simply ignore them.
4. Use a name. If it's important enough to say, it's important enough to put a name to.
5. Above all: Act with honour. Say what you mean, and mean what you say.