Registered Master Builders recently released a report to identify the cost of regulation on housing affordability. The report was prepared by BRANZ on our behalf, and is supported by the Construction Strategy Group.
The report highlights a number of recurring regulatory requirements that currently can create additional costs of $35,000 to $77,400 on a $567,000 new house in Auckland, with a subsequent increase in mortgage payments of $134,000 to $266,000.
Housing affordability has been on the industry radar for some time now, and while land availability is critical and a large component of any future solution, there are many other factors that, when added together, can create an overwhelming financial hurdle for New Zealanders wanting to enter the new home market. This is, of course, particularly an issue in Auckland.
Home ownership is part of the Kiwi psyche — it’s what most of us aspire to. International studies show that quality affordable housing is a major component of the infrastructure, particularly in larger cities, that creates economic growth and attracts people — in other words, it’s important.
One of the issues the report highlights is that there are a range of regulations imposed either at central or local government level that are all dealt with individually.
The major costs relate to the Resource Management Act, the Building Act, the Building Code, and health and safety.
While there are justifications put forward for each of these, nobody currently looks at the combined impact of them all. This report does so for the first time.
While we definitely don’t yet have all the answers to fix the issues identified in the report, we want this document to take its place as part of the debate about how to improve housing affordability.
We have forwarded the report to the Productivity Commission as part of our submission on improving housing affordability. The full report is available on our web site at www.masterbuilder.org.nz.