Paul Lochore: Council delays, skill shortages and China's exit are killing new housing

New Zealand has gone to sleep in the housing market. Photo / Doug Sherring

Opinion

Have Auckland journalists gone Awol? Why aren't they investigating Auckland Council's inefficiencies and excessive costs relating to building and resource consents?

New Zealanders tend to be passive about challenging bureaucracy. We moan and groan, but we don't get up and fight for our rights.

Why does it take two years on average to get building approval from the council to build a home? And why does it cost so much? Why is the council not being held accountable to ratepayers for its inefficiencies?

A young relative of mine recently applied for a building consent to construct a modest two-bedroom home of 65-70 square metres. It cost him $69,000 in council fees to get a building consent, which included $13,500 to connect to a water meter. Seriously? This equates to just under half of what it cost him to build his prefabricated unit, which was $159,000. (This cost does not include drainage and laying the foundation.) He has been waiting six months for his Code of Compliance.

You can expect it to take at least eight months after a building is completed to finally extract a Code of Compliance certificate from the council. What are they doing? Sitting on their hands? Do they have enough qualified, experienced staff to carry out this work?

How is Auckland going to create modest, more affordable homes for first-home buyers if the council's costs continue to represent such a disproportionate amount of the overall cost of construction? It's a gravy train for incompetent bureaucrats.

Until there's a royal commission set up to investigate the high cost of the council's consenting process, its delays and incompetence will continue to contribute to driving up the costs of housing. The Government needs to step in.

Councils have a responsibility to ratepayers to perform, to follow best practice, and yet Auckland Council is failing to do this in the building consent area.

Let me spell out yet again how desperate the situation is in construction in Auckland right now. We have a chronic shortage of tradespeople and a desperate shortage of construction materials, so tradies' rates and materials prices have shot up accordingly. We also still have a vast legacy of leaky homes to repair – and, believe me, the council extracts its pound of flesh in this area too.

The Government owns the most sub-standard houses in New Zealand, managed by Housing New Zealand. We homeowners are expected to maintain our properties to building code standard – why isn't the Government?

And where are the tradies to make the necessary repairs, let alone start the Government's admirable KiwiBuild programme, of 100,000 houses over the next decade? Who is in denial here?

On the North Shore I regularly observe the standard of homes owned by pensioners deteriorating because of the high cost of maintenance. They can't easily get home handymen, let alone at reasonable rates.

If one party dies, life is even tougher for the survivor. Pensions haven't kept up with the cost of living, particularly in Auckland. Many pensioners rely on the pension to survive.

The increased cost of living means they are living on or below the poverty line. This is sad and tragic – not what we want for the elderly in our communities. They deserve to be able to live with dignity.

If a company as substantial as Fletchers can't make money out of big development projects such as the Canterbury rebuild, what do you think is going on with medium-sized developers right now? Most big developments here now are Asian or Asian-joint ventures.

The Chinese Government has cracked down on funds leaving the country. And because of the aforementioned issues with escalating costs and delays, purchasers are getting fed up. Some are walking away from their deposits. Do you blame them?

Another reality – there is little or no housing stock for first-home buyers right now in Auckland.

But then the real estate market has gone dead. New Zealand has gone to sleep in the housing market. Homeowners feeling wealthy and optimistic because of their increasing property equity are upgrading their cars and heading off on overseas holidays. Housing listings are the lowest they've been in my 55 years in real estate. And I've seen more property cycles come and go over my career than many of you have had hot dinners.

Yes, of course the over-inflated Auckland property market needed a cooling-off period to bring some sanity back into the situation, but this . . . this is something else. We have a perfect storm, folks. Buckle up.

• Paul Lochore is managing director of Lochore's Real Estate, Birkenhead.