Springpark's next stage hits the rocks

Springpark, Auckland's first proposed mass affordable housing project.

Buyers of Springpark's next stages are the latest victims of contract cancellations - being blamed on rocketing building costs.

After it was revealed yesterday that receivers won't keep building stage one of the troubled Auckland housing project, buyers of the next stage received letters saying their purchases would also not go ahead as planned.

Rising construction costs were to blame, they were told, and one angry buyer said rises up to $100,000 per residence was planned under the new contracts.

This is just the latest blow at the ex-Zealandia Horticulture site where developer Tony Gapes planned to build about 450 homes and where further stages were sold to the "Happyland" company.

Gapes' Panama Road Developments this month hit receivership for the second time, leaving 142 depositors who paid $7.3 million up front for a new home in the lurch.

Now, Leo Li, executive director of Wilshire Ryburn Developments (formerly Happyland) based in Shortland St has written to buyers cancelling their contracts.

"As you may already know, the land that comprising [sic] stages 2 and 3 of the project Springpark that was being developed by Panama Road Developments (PRD or you have have known of them as Redwood) was sold earlier in the year to Wilshire Ryburn Development, which is a subsidiary of Wilshire Group.

"Wilshire Group is a property development company that has recently been established in Auckland and is growing its team and project base. Wilshire is committed to creating great quality homes within great neighbourhoods," Leo Li wrote.

"We wanted to write to you independent of the letter sent by our lawyers Carson Fox Legal to your lawyer cancelling your contract to purchase a property at Springpark Stage 2 as entered into with the previous owner of the land.

"We appreciate that you may be feeling disappointed about the cancellation of the contract. Due to a variety of factors, primarily related to construction costs, the homes as previously designed and sold by PRD Stage 2 are too expensive to deliver for those prices, meaning that the whole development as previously proposed simply is not economically feasible and consequently not fundable," Leo Li wrote.

So on top of those who have lost out in stage one, further... families are without a home they hoped to move into within the next 18 months.

disillusioned buyer

Two bedroom places will now cost up to $645,000, three bedrooms up to $719,000, four bedrooms up to $799,000 and five bedrooms up to $859,000, Leo Li wrote.

"The home designs and prices will be quite different from what you had seen previously," he wrote. "These higher prices reflect the higher construction, design and consenting costs that are required to deliver quality homes."

One buyer told the Herald she was deeply disappointed to receive the letter. She had hoped to buy at the lower price and could not afford the increases. Prices for the residences were up more than $100,000 each, she said.

"This news is incredibly disappointing and frustrating, but not surprising. It is yet another example of new housing developments going failing before the new foundations are laid.

"We waited six months for news and were continually fobbed off, told that the build will definitely proceed, as the Chinese developers are looking to set a precedent and they are very much aware they have people relying on them to make a good impression, and that they don't want to let the Kiwi public down. We have this on email."