New ways must be found to reduce constrcution costs in New Zealand after a recent survey of housing affordability across 22 markets found this country at the bottom of the list.
There are many things that need to be done to attack this problem without cutting the profit margins of builders. At the moment there are no obvious mechanisms in place to help the industry become more efficient using either new building processes or practices.
Somewhere between 50 and 100 new building products are introduced to the New Zealand construction market each year, and some of those can significantly impact on construction costs and efficiency.
The problem is that most builders are unaware of them.
For example, fibre cement sheets are typically joined at their edges using a time consuming and expensive process using a jointing system. We’ve recently evaluated and appraised a new tape that enables the job to be done in about 10% of the time and at 10% of the cost, and with increased reliability.
We are currently looking at ways to make these products more widely known to builders. We believe their wider use could cut the cost of housing to some extent, without damaging the margins currently being made by builders.
This is only one way to help reduce the cost of building a new house. Another is to cut the price of land. This is an area where Australia is well ahead of New Zealand. We pay up to 80% more than they do across the Tasman.
I agree with the argument put forward by Christchurch-based co-author of the International Housing Affordability Survey, Hugh Pavletich. He believes the problem would be solved if the Government freed up land on the outskirts of cities for houses to be built, and helped buyers with their mortgages.
There are ample amounts of land available for this because New Zealand is lightly populated. The United Kingdom is smaller than us and has 60 million people, while Vietnam is also smaller and is home to 80 million.
Unfortunately, our government missed a great opportunity last year when it failed to offer support to first home buyers. This would have helped them control costs and limit the exodus of subcontractors to Australia.
Infometrics now believe in two years’ time there will not be enough resources to build the houses needed for a growing population. This will only increase the price at a time when it desperately needs to be reduced.
In my view, using new products and processes that have been properly evaluated for New Zealand conditions is one certain way of helping the construction industry become more efficient.
