The biggest increases in the cost of building a house in New Zealand have come from increased local government resource consent fees and higher land development costs, according to new research.
A 2013 update of a 2008 report by Branz, an independent research organisation serving the building industry, shows a 25 per cent increase in land development costs – covering infrastructure, professional and council fees – and a 75 per cent increase in building consent fees over the last six years.
While lower interest rates had offset these changes and improved housing affordability in most parts of the country, “Auckland median priced housing, new and existing, is unaffordable for a median-income household unless they have a large deposit”.
Conducted for the Construction Strategy Group, an ad hoc body pulled together by the Building Industry Federation, the Branz study shows that new housing costs rose about eight per cent over the period from 2008 to 2013.
Of that, 12 per cent came from higher material costs, there was a 12.5 per cent increase in labour costs, and that profit margins had fallen by two per cent in an industry characterised by small construction firms building mainly one-off houses, with both these factors adding to the relatively high cost of building a house in New Zealand.
An accompanying report of nationwide workshops held by the CSG says inconsistent approaches across the country by councils and planners were a major theme, with workshops urging an “affordable homes” policy to be adopted by planners.
Lengthy and delayed processes, in particular, were cited as major reasons for developers to target higher value homes and for difficulties experienced by the industry as a whole in making acceptable returns on capital employed.
The CSG also supports a “productivity partnership” approach that seeks to reduce materials and labour costs by a minimum of 20 per cent through increased standardisation of componentry to reduce material and design costs, house designs targeting less materials wastage, and better co-ordination of tradespeople.