Wednesday 22 May 2024

And you wonder why building is so expensive! [update]

UPDATE: "It's almost 2018 and we are still building our homes like it's 1918. It's time to fix this. ... why [can] one drive a cheap Hyundai straight into a driving rain at 70 MPH and not get a drop of water inside, yet we have trouble building a house that can stand still in the rain and do the same. ..."

It's said that the two biggest things most people buy in their lives are a car, and a house. To be more correct however: most people will buy the car; not everyone though, these days, can afford to buy the house. Particularly in our major cities.

And it's getting worse. While the price of cars has been generally declining over recent decades (due to innovation, greater competition, increasing productivity, better supply chains etc.) the price of houses — and the price to build a house — has been doing just the opposite. It's not because the quality of cars has been decreasing, either.

Why is that?

You'd think it would be the other way around. Think about how different it is to build a car, and to build a house. Cars require precision engineering, advanced technology, and specialised manufacturing processes. Hundreds of millions go into designing and engineering the chassis, the engine, in designing the looks, the interior, the space inside…and then you have to provide a suspension system, a transmission, miles and miles of wires, electronic systems that control the engine and won’t let you crash, such as ABS and traction control. Then you have to put in the costumer-trap things, like a nice info-tainment system, heated seats, iPod playback, sunroof and so on. Then you have to make all of these reliable, make sure it will keep on going for at least 200000 km? And it has to be safe. So airbags, crashbars, seatbelt and on and on.
Not to mention the whole service programme, and spare parts networks …

Yet with all that complication, car prices have generally been declining. Perhaps because, with cars, cost-saving innovation is generally encouraged. Permitted. Allowed. Even though most people could never build their own car, these complicated machines are becoming ever less expensive, even as they become ever more comfortable, reliable and serviceable. Advances in manufacturing technology and efficiency reduce the cost of producing cars, and manufacturers pass some of these savings onto consumers.

Yet while many people could and have built their own house, this far less complicated thing is taking longer to build, and costing far more than they ever have before. Stu Donovan from Motu explains that 
Research finds that planning policies add significantly to housing costs, especially for smaller and more compact dwellings. Examples include minimum area requirements for dwellings / lots / balconies / landscaping / communal areas along with minimum parking requirements.
And all of those rules are prescriptive. Dictatorial. No room at all for innovation. (And if there are benefits, no robust evidence they are greater than costs.)

With a car, innovation is stimulated and rewarded — not just allowed it is encouraged — and its has resulted in better cars at cheaper prices. By contrast, in local building, the productive must ask permission from the unproductive in order to produce. And the unproductive continually require more before that permission is granted.

Easily six months to a year (or more) for a resource consent, a mountain of paperwork, and many people running around asking and answering questions like "is this more than a minor effect on the amenity value of the area?" Similar time, time-wasting, paperwork and questions for a Building Consent — not to mention the extra mountain of documentation proving that your client's chosen widget complies with four or five different chapters of the Building Code (as recently amended).

Not to mention the even longer and almost interminable process if you're trying to use innovative materials or systems that the regulator hasn't seen before. 

No wonder innovative "widgets" are discouraged.

No wonder builders and developers generally shun innovative technologies and typologies in favour of those they know council are more likely to allow.

No wonder we're still using stick-framing technology from the nineteenth century to build our houses — a technology that pre-dates the car. 

The fact is, innovation in house-building has been stultified by the regulators who require you to believe they know best.

Yet as architect Frank Loyd Wright used to say, ""The building codes of the democracies embody, of course, only what the previous generation knew or thought about building..." (And here we still wouldn't be allowed to build the houses Mr Wright was erecting back in the 1930s!)

Why do we allow this ridiculous state of affairs about something, a house for goodness sake, that is so gosh-damned vital to human existence?
In his book 'Permissionless Innovation' ... Adam Thierer argues that creators of new technology shouldn’t have to seek the blessing of skeptical, out-of-touch regulators before they can develop and offer their innovations to consumers. In fact, it’s because some innovators have had the nerve to start a business without asking for permission that we all benefit now from services like Uber and Lyft, Homejoy, grocery-delivery services like Instacart, last-minute errand-running services like TaskRabbit, restaurant-quality meal-delivery services like SpoonRocket, and more.
We should be glad for these regulation violators, says Veronique de Rugy, who dared to dream that their ideas could find willing consumers to make them rich.
Yet I worry that as consumers, taxpayers, businesspeople, and citizens we have lost the notion that just as innovators shouldn't have to ask for permission from the government before they can bring new products to consumers, people who want to try out new arrangements for living their lives or making their livings shouldn't have to ask for such permission either.
    I understand why people often fear freedom or the consequences of breaking the rules, and thus acquiesce to government restrictions on their freedoms. But I fear that we have gone too far in this timid and cowardly compliance. So long as everyone respects everyone else's rights, we should have permissionless consumption (foreign and domestic), permissionless employment, permissionless entertainment, and permissionless everything and anything that's peaceful.
    A right for consumers to try new things or to buy what they really want should be the default presumption.  That shift would effectively knock down the barriers to progress erected by officious governments and self-serving special interests.

Rights come with responsibilities. Allow consumers, i.e., builders and house-buyers, to take responsibility for choices. And give them the right to choose.

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