Size is everything in house shortfall
The answer to New Zealand’s housing supply issue is simple – we need to build good houses more cheaply. Essentially, that’s an engineering and design problem and there are countless solutions to it. Different materials, multi-storey dwellings, shared-land-use models or the employment of breakthrough technology such as 3D printing, for example.
Sir Stephen Tindall believes even a traditional home could be built for 42 per cent less than it is now through supply chain changes. The engineering and design is the easy part.
The harder part in fixing the supply issue, and by extension the cost issue, is changing expectations so that people accept new forms of housing as desirable and are prepared to pay for something other than a threebedroom, two-car-garage monolith.
The average construction cost of a new house in 2017 was $395,000, except in Auckland where it was $455,000. The average size of these homes, as stated in the Government-commissioned report A Stocktake of New Zealand’s Housing, was 210 square metres, except in Auckland where it was more than 230sqm.
With Kiwi homes having an average occupancy rate of 2.6 people, these new homes are obscenely large. That’s one big reason why they cost so much.
Immigration, council bureaucracy, our distance from international markets and the relatively small scale of the construction industry play a huge part, as do the increasing standards in building design.
But there’s no avoiding our own inflated preferences are a massive factor in pitching us into the housing crisis mire. Just 30 years ago homes were between 50sqm and 80sqm smaller. We want more now, so we’re paying for it. But it’s not good for us.
Housing and Urban Development Minister Phil Twyford says all New Zealanders deserve to have a secure and healthy home – that the home is the foundation which allows us all to build happy and successful lives. He’s right. Good, affordable housing is the bedrock of a successful country. We proved that 70 years ago with the construction of hundreds of thousands of state houses.
But our size preferences are one thing holding us back from arresting the decline in home ownership. We cannot rely on the current market to supply us with the type of housing we need to beat the supply issue. Because the market is churning out the massive homes that it, and council planning departments, know so well. They are neglecting the smaller and smarter ones the country needs.
The Government’s KiwiBuild programme must take an even greater leadership role in changing this. It needs to invest in more housing designs and community models that result in lower overall unit prices and forge a path for these innovative ideas through council bureaucracies that are now unnavigable to the private sector.
The Government needs to be big and bold and give private industry the confidence to invest in processes that can churn out housing on a huge scale. It also needs to show Kiwis that a home doesn’t need to look like the one their parents had.
It’s time to experiment, to be courageous and to show a genuine openness to new ideas that will give everyone a shot at owning a home at an affordable price.
The market is churning out the massive homes that it, and council planning departments, know so well. They are neglecting the smaller and smarter ones the country needs.