Housing crisis… ‘tiny houses’ miss the point entirely

Many cities in Australia and New Zealand are currently experiencing a housing crisis. There is both a lack of supply and what is available is very expensive (when wages and taxes are considered).

From my experience, in the last 25 years, the price of “starter” houses, the very cheapest you could find to buy, in the Christchurch metro area has increased about 15-fold. Gross wages have about trebled (but are now taxed more highly anyway).

This has made things very much harder for people to get “onto the property ladder” (ooh I just HATE that term), especially for one income households, including single people, as well as lower income earners

The main problem, throughout both Australian and New Zealand’s major cities (and even some major country towns) has been the shortage of land.

New Zealand for example has about same land area as the United Kingdom but with only one 15th of the population of the United Kingdom, yet we are suffering a “land shortage”. Yes, Australia and NZ do have a lot more land tied up in National Parks and other wild places, which is why tourists from all around the world flock to see our countries’ natural beauty. There are also vast tracts of land set aside under various “native title” and Aboriginal land reserves.

But among at least some other commentators, I am left with the conclusion that it is the deliberate strangulation and limitation of the supply of new land for housing developments, which is a major cause of the crisis we find ourselves in today. In 1986 land for a housing section (block or plot) on Perth’s outer edge, could be purchased for less than $10,000. Buy 2007 that price had increased to $170,000. Now ‘supply and demand’ effects and often controls the price of, well almost everything. From new toothbrushes to cocaine. Yes the population has increased a bit. But certainly NOT 17-fold.

Restrictions seem to happen at every level, but local councils have perhaps the biggest part to play. Trying to maintain a pleasant GREEN BELT of hobby-farms and lifestyle-blocks on the edge of cities (“with room for a pony” as Hyacinth Bouquet, the Bucket woman, would say) is a laudable idea. Except that we live in a society where as well as immigration, we have a growing population.

Society needs to sit down and have a serious talk. If People are allowed to have more than 2 children in their lifetime, then those children need places to live and work when they grow up.Perhaps if we are to allow unfettered reproduction, we need to allow unfettered development of new “greenfields” lands and new housing ?

There have been some articles lately on television and I was moved to make these comments in relation to a newspaper item.

People seem to think that making tiny houses is the answer. Often to comply with local zoning laws, these tiny houses are fitted with wheels, although they are not intended as road-going caravans. They are NOT licenced to travel on the roads and cannot be towed along or moved unless they have a special transport permit, and often extra wheels fitted.

Now don’t get me wrong, us Western Worlders need to start living more lightly on the planet, and having smaller homes is a part of that equation.

But spending the same amount of a house deposit and months of labour, constructing what amounts to a wooden caravan, is not the answer.

Where are you going to park the blimming thing ?

What few caravan and holiday parks exist are already full of people living in caravans because there aren’t enough houses for people to live in. And more and more, because of the government’s strangulation of new land supply, the caravan and holiday parks that exist are being sold off for other developments and the tenants there thrown out onto the street.

Another factor affecting the price of new housing is entirely unnecessary red tape from local councils.

Now I support building codes. One reason for the minimal casualties that occurred in residential houses during Christchurch’s devastating earthquakes of 2011, is because our houses, especially those of 2 or more stories, must be earthquake resistant.

Soon after arriving back here, I visited a building company and described a housing style I had seen in Australia, but not New Zealand. The guy showed me some catalogues and yes they had similar things available here. A one or two-storey house could indeed be constructed in less than 6 weeks instead of the usual 8 months, and the cost per square metre of floor area was less than 2/3 the normal price (in Australia it’s less than half). “Oh, but you’d never get a building consent to build one in Christchurch” he said “someone at the council doesn’t like the look of them.”

Well “I” don’t like the look of rose bushes in people’s front gardens, should I be allowed to ban them city-wide ?

Keep in mind these houses would comply with all required building, health and safety, fire safety and earthquake resistance codes. Someone at the local council just “doesn’t like the look” of certain housing styles, so EVERYONE has to pay 33% or 50% more for their new houses and has less choice of style !

For many decades now, throughout most major Australian and New Zealand cities, there has been very little new housing built “at the cheaper end of the spectrum”. Some new land subdivisions even have covenants on the title which actively forbid cheaper homes from being constructed.

In due course, and with only expensive houses and land coming on to the market, even years later, what few older and cheaper houses that do exist, get snapped up (often by “developers”, in the case of Auckland, land supply is so tight that even fully refurbished homes which have just had $100,000 in renovations, are often being bought just to be bulldozed, so the land can be used for a new, and even more expensive house build. So there are even LESS older cheaper homes, what used to be the “starter” home for a “first home” buyer.

Here’s a link to the article and following on are my two main comments relating to it. (This was originally published elsewhere and has been edited and extended for publication here).

http://www.stuff.co.nz/the-press/news/10135430/Snug-living-space-part-of-global-trend

(1) Sorry it is still dearer than a large caravan and double the price of a 54m2 “4 car garage” that could also be converted and used for housing. The $50,000 price is indeed DEARER than a house deposit for some cheaper Chch houses and you still need a section to park the tiny house or caravan on ! If you have $ 50 k, buy the cheapest house you can and you have room to park 10 caravans or tiny wheeled houses…. and charge all the residents therein $150 a week each in ground-rent. Unfortunately this guy has got a lot wrong. I wonder if it is because he is coming from a background of wealth and privilege and I think he has largely “missed the point”. Note…in principle I am a huge supporter of folks living in tiny houses, caravans and other alternative structures. This guy still needs a section with an un-condemned house on it, to be allowed to park it there and to stay in the wooden-caravan he’s made legally.

(2) Here’s a place that before the earthquakes of 2011 would have sold for about $375,000. It suffered some damage in the earthquakes but is still a completely livable home. The owners have accepted a cash payout from their insurers but chosen NOT to repair the damage. As such the house is being sold “as is, where is, uninsured and uninsurable” for little more than land value only. Repairs can easily run to $100,000 if new earthquake resistant foundations need to be installed underneath an existing house. (URL below, sorry but it no longer works) A beautiful 3 bedroom house in Papanui. It has a “land value” of $151,000 and the entirely livable house will probably sell at auction tomorrow for about $170,000k. That would require about $50,000 deposit. The section land size is under 600m2 so only enough room to park 7 caravans or tiny houses. Still that’s $1050 a week rental income and the mortgage repayments would be $182 a week. So that’s $800 a week in profit or pay off your house freehold in two and a half years ! Thanks Catherine you’ve saved the day yet again. Why are you the lone voice crying in the wilderness and no-one listening to you ! (ok so I cheated slightly, I didn’t consider income tax obligations, but that’s what family trusts are there to avoid eh !)

Note the auction was held on 12 June 2014, I do not know what price it reached at auction. Often in NZ, even at mortgagee auctions, houses get “passed in” and the mortgage holder simply refuses to accept the highest bid, as they are seeking a higher price still.

Here is a link to the advertisement but the way NZ’s Trademe auction website works, is that the advertisement will no longer display.

http://www.trademe.co.nz/Browse/Listing.aspx?id=733349432

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s