High price of land thorny issue

[PC]

Land. As they say, they're not making any more of it.

The Productivity Commission's inquiry into affordability and Fletcher Building sing with one voice on the issue: freeing up more land is the key to solving issues, particularly in Auckland and Christchurch, they say.

Auckland Council disagrees and cites 18,500 sections, ready and waiting, wanting to be lived on, all services ready to go, all zonings in place. But the developers do not come.

The Sallies want to solve this with more bureaucrats - a new agency with deep pockets and good intentions.

http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=10836930

Capital gains tax & more bureaucrats - that'll fix it!
What a bunch of clowns.

[Maccachic]

Why don't they target food producers too, for making a profit they are adding to increased cost of living.

[spaceman]

From the article

people penalised for getting rich from the city's housing stock

Yeah!!!!....lets penalise people for getting rich from farming too...and plumbers...and accountants.....and lawyers........stuff it we'll just penalise all the rich people...... how dare they be rich it's not like any of them ever actually worked for their money.... they're all just parasites.... come the revolution we'll line all those rich bastards up against the wall, and gun them down. That'll fix everything

Cheers
Spaceman

[Meehole]

Ngai Tahu have just released details of their sections in Preston Rd, Christchurch. Titles are due Dec 2013, sites range from 450 - 900 m2 and priced from a couple at $199,000 to $250,000.
This is fantastic for the people who are from the East and want to remain living on this side of town, and at present another sub division on that side,Highfield is not looking like being ready until early 2014.
There are also sub divisions under development around Halswell, Lincoln, Rangiora, Kaiapoi, Wigram which if not already developed will be ready for building on before the end of this year.
My question is where are all the punters going to come from to buy up this land?
Redzoners are paid out for their land and the payout may or may not be the same value as the land they occupied, if less then they have to make up the difference. If the house is rebuild/replacement then they will get the same m2 they previously had. If their house is deemed a repair then they come up short in funds.
I guess what I am trying to get across is that the average punter here will find it very hard to build a new house for themselves as the cost of the land, at present, is too high.
If you are a family coming from say Palmerston North because dad has a job as a tradey down here, unless you can fund a $550k build for a basic 3 brm, 2 bathroom, double garage home then you will be looking for long term rental.
That is average pricing in a regulated sub division, a section whereby the house has been demolished usually poses it's own costs such as geotech report and engineered piled and raft foundations but at least you can build whatever you want on the site as long as it meets Council and building requirements. Eg relocatable or modular home.

[Perry]

It's not been mentioned in this thread, yet, but regulatory,
bureaucratic and compliance costs are a huge chunk of the
'high' price of land. In a PT thread someone referred to one
developer who commented that non-land costs for average
sections in average subdivisions was nearly $90-100k; nearly
all being local and national government fees and charges.

[DazRaz]

If you are a family coming from say Palmerston North because dad has a job as a tradey down here, unless you can fund a $550k build for a basic 3 brm, 2 bathroom, double garage home then you will be looking for long term rental.

You may not be aware, but second hand homes are commonly bought and sold.

[flyernzl]

. . . regulatory, bureaucratic and compliance costs are a huge chunk of the
'high' price of land.

Back in the days of the first 'oil shock' a city in Canada hired a consultant to advise them on the best way of conserving and limiting the use of transport fuels.

The consultant came to the conclusion that the best thing the City could do was to provide additional easily accessible vehicle parking.
After all, no matter how economically you drive to your destination, all that effort is wasted if you then cruise around city block after city block searching for a parking space.

The City fathers were, of course, horrified at this solution and immediately fired the consultant.

Understandably, they did not want someone who told them that they had to change. What they wanted was a finding that would allow them to impose additional taxes, restrictions, rules and penalties on private motorists all in the name of 'conservation'.

Similarly, the NZ bureaucracy does not want housing-cost findings that will peg back their behaviour. They want to find easily accessible scapegoats in the private development and building sectors that they can blame and punish. So much more fun.

[Perry]

Yeah - it could be hilarious
if it wasn't so true.

[Winston001]

Back in the days of the first 'oil shock' a city in Canada hired a consultant to advise them on the best way of conserving and limiting the use of transport fuels.

The consultant came to the conclusion that the best thing the City could do was to provide additional easily accessible vehicle parking.


The City fathers were, of course, horrified at this solution and immediately fired the consultant.

What they wanted was a finding that would allow them to impose additional taxes, restrictions, rules and penalties on private motorists all in the name of 'conservation'.

Similarly, the NZ bureaucracy does not want housing-cost findings that will peg back their behaviour. They want to find easily accessible scapegoats in the private development and building sectors that they can blame and punish. .

Good post but I think you extrapolate too far. The people who are elected to be councillors and the staff who are planners are just ordinary folk like you and me. Councillors try to make decisions which the general population will be happy with.

Planners are experts and professionally interested in doing a good job. They are not out to crush a city under bureaucratic red tape. What they do is advise on the optimum of building and development. The councillors then reject or elide the planners advice so we end up with a real world but not particularly clever type of planning.

The glaring examples are the subdivisions allowed by Christchurch in the marshes to the east which were specifically advised against by the planners. If you are going to do that you have to live with the consequences. Apart from the cost of disaster that means vastly tighter controls = expense, afterwards.

[Meehole]

You may not be aware, but second hand homes are commonly bought and sold.

Oh I am fully aware that 2nd hand hand homes are bought and sold. Are you aware that there is a property bubble here in ChCh and 2nd hand homes are selling way over their rv's?
There was a brief moment in time a few months ago when it was actually cheaper to build than buy 2nd hand.
But that's fine because someone here will sell their over inflated priced home to the family from PN and with the proceeds build themselves a home that has not been shaken around by 1000's of earthquakes.
The thread was about the high price for land, just keeping the others informed.

[DazRaz]

Meehole, I have been in Christchurch for over 20 years longer than you and I am aware of what is happening here. I've missed very few of the earthquakes. Are you aware that the RVs have not been updated since 2007. The RV figures are useless and not surprising that the homes are selling well above that.

A quick search of homes <$300k comes up with over 10 pages of results on trademe. I would suggest that a cheaper option for a tradey from Palmerston North would be to purchase rather than rent. I've bought two houses in Chch since Sept 2010 and neither of them cost more than building from new. Not sure who you feel you are keeping informed.

[Davo36]

Good post but I think you extrapolate too far. The people who are elected to be councillors and the staff who are planners are just ordinary folk like you and me. Councillors try to make decisions which the general population will be happy with.

Planners are experts and professionally interested in doing a good job. They are not out to crush a city under bureaucratic red tape. What they do is advise on the optimum of building and development. The councillors then reject or elide the planners advice so we end up with a real world but not particularly clever type of planning.

The glaring examples are the subdivisions allowed by Christchurch in the marshes to the east which were specifically advised against by the planners. If you are going to do that you have to live with the consequences. Apart from the cost of disaster that means vastly tighter controls = expense, afterwards.

Wow I really disagree with all of this.

Planners are the experts and we should just listen to them? Far out.

In my experience council planners are: arrogant, deluded, petty and regularly exceed their mandate. A big part of their jobs seems to be in bringing in fees for the council. And they regularly try and stop developments they personally don't agree with.

The elected staff, the councillors, have waaaaaaaay more common-sense than any planner. But sometimes they get 'caught' by them and their visions e.g. Len Brown, who has bought the smart growth rubbish hook line and sinker.

Do you have any proof for this statement?

The glaring examples are the subdivisions allowed by Christchurch in the marshes to the east which were specifically advised against by the planners.

This assertion was made fairly early on after the earthquakes and then (I thought) proved to be false.

[Meehole]

DazRaz, I lived here over 25 years ago and have many friends and family here so along with the opportunity to be able to spend time with them the opportunity of work in the construction industry here was reason enough to return.
I am fully aware that the valuations were done in 2007 and also fully aware that many homes in NZ have not reached their 2007 value following on from the recession. In fact judging by condition of many of the properties I have visited, to be paid out the 2007 value is like winning lotto. Of course there are exceptions to the rule both good and bad.
I note that your reference was Trade Me, my information comes from being in the midst of the residential rebuild and repair sector. That combined with searching for a property to buy or build to live instead of paying the $500 week rent we currently pay.
Even with the skills both of us bring to the table in being able to renovate extensively, that includes broken foundations on TC3 land, the asking price for many of the existing houses is ridiculous, but they sell because people are desperate to secure something and put down roots.
With April 2013 rolling around very quickly, the desperation will exacerbate and if I had an existing home that is good condition I would be putting it up for sale around March. The bubble will burst here and some people will find themselves living in a house valued at less than they paid for it. I know from experience, I purchased a property in Whangarei in Dec 2006 for $255,000, did not negotiate the price as investors were buying them up sight unseen from Auckland. Spent $15,000 tidying it up and the bottom fell out of the market and there it has stayed.
I'm having an agent look at it this week as I have been told that investors are now looking up there in earnest and I know for a fact that at the moment I will not get what I paid for it, let alone what it owes me.
That is what happens when you buy at the peak and live in a house while renovating it. It takes too long and the market can move downwards and you miss the moment. Better to buy and renovate quickly.
Hey DazRaz we have been around the industry for awhile and I follow the housing markets, sales and rental with a passion. If my comments can in any way inform someone that's new into investing or challenges them to have eyes opened wider and ask the pertinent questions then that's great.
But the subject was on the affordability of land and there is no doubt that the price of buying land here in Chch is climbing.

[Wayne]

call me thick but what happens in April 2013?

[spaceman]

^ dumbass.....wait.....I don't know either

Cheers
Spaceman