KEY POINTS:
Brent Mettrick apologises down the line for his stream-of-consciousness rant on soaring house building costs. His firm, Stonewood, has tracked price escalations for the past five years on its three-bedroom Rivera house, showing the construction cost rose 63 per cent.
The Christchurch-based builder itemises the friction points. Land prices - largely a product of supply and demand - were the biggest mover, doubling in five years.
Labour costs rose 50 per cent in a time of labour shortages, but that was also due to the longer time its took to build. The reason for that is the much tougher regulatory regime, starting with council scrutiny of building consent applications and detailed design requirements.
"Five years ago we did 280 houses with three draftsmen. Now it takes four times the draftsmen to do a similar number of houses, producing 20-page plans instead of six pages. We also need to cost the plans, so quantity surveying costs have multiplied."
Councils are also in the gun for development levies - costs they recoup for services associated with housing such as parks, footpaths and drainage.
While most councils claim to meet the Government's 20-working-days target for processing most building applications, builders know otherwise, says Mettrick.
"We used to be able to put the PIM (project information memorandum) and the building consent application in at the same time. Currently in Christchurch it's taking up to six weeks to get the PIM and an additional six to eight weeks for consent processing.
"No matter how long they say it's taking, the timeframe will be that for every builder."
While consent hurdles are negotiated, the landowner's holding costs rocket.
"We used to go to suppliers and lock down the pre-cut price from day one. Now they are building six months' inflation into the price.
"It used to be we would meet a client at the beginning of the month and one week in we would go to the council and after three weeks we would have a consent - from walk-in to being on site would be five weeks. Currently it can take five months."
"During construction, instead of having six to eight inspections at 24 hours' notice we have to give five working days' notice and have 15 inspections. "Multiply that and that's how many days it used to take to build a house."
Building Minister Shane Jones this week announced the latest Government plans to make houses more affordable: multiple-use consents for a standard design repeated in subdivisions, streamlined consents for basic starter homes built to approved designs, and reduced consent requirements for minor alterations.
The changes, flagged a month earlier, are the latest attempt to take the heat out of a looming election issue - the vanishing supply of affordable housing, the stresses on families in the mortgage-belt and the despair of the growing number who can't get a mortgage.
They follow last November's announcement of a bill allowing councils to require developers to provide affordable housing quotas within projects - a step few councils favour.
Earlier moves - including shared equity schemes (in which third parties such as councils or housing associations help low income earners by taking a stake in property purchases) and "Welcome Home" loans to help with deposits - have been criticised as helping a handful.
Every road the Government takes to find affordable housing seems to lead it up a cul de sac. The latest pledges drew more flak than support: they would lead to "ticky-tack suburbia" - as if that could be worse than the "McMansion" subdivisions and shoebox apartments which have sprouted in the past 20 years.
More relevant is the charge that easing consent processes alone won't do much to bring down the price of a new house - consent fees, even delays, pale in comparison to (recently) soaring land values, material cost increases, council infrastructure charges and higher interest rates.
Another concern is that small building firms will be squeezed out by big players with their modular designs and economies of scale.
But while the building-block attempts to fix the problem provide fodder for the Opposition in Parliament, at least the latest plans are grounded in a broad understanding of the crisis.
Five years after the affordability issue emerged, a House Price Unit set up by the Prime Minister's Department has finally got its head around the wide-ranging causes and potential remedies.
What will it take to bring house prices back to affordable levels?
A bit of everything might just turn the tide - requiring long-term political will in portfolios (Housing and Building) seen as stepping stones for aspiring Cabinet ministers.
The House Price Unit's report calls for further work in several areas: compliance costs, land supply, building productivity gains, tax changes, infrastructure charges.
New houses account for only 20 per cent of housing turnover, but making them cheaper to build, and building more of them, should help check general house price inflation.
But the prospect of simplified consents for basic starter homes scares the hell out of those who have seen the consequences of the last state attempt to free up house building constraints - the leaky homes disaster.
"Some of it is a step back rather than a step forward," says Harry Dillon, whose firm Reconstruct specialises in repairing leaky homes.
"[Streamlined consents] may save time and money at the front end but if the houses are low quality it could cost a lot more. We don't want to end up rebuilding the housing stock of New Zealand as we are doing now."
Consent delays are as much down to a lack of skills and resources within council building inspectorates as to increased paperwork, says Dillon.
"Rather than make it easier to get consents let's upskill the building inspectorates and assessors.
"What they need to be doing is providing more resources and support to councils to make sure building consents are processed in good time and of sufficient standard to prevent failures in future."
But most builders blame the blanket regulatory response to leaky homes for the excruciating delays which are adding to the cost of homes.
"We used to put $100 of black building paper around a house," says Stonewood's Mettrick. "Now with the type of building paper required and window sealing tape and so on, we're spending in excess of $1000.
"We used to line the interior while the brick work was going up. Now we're not allowed to touch the inside until the outside is finished. It adds four weeks to construction time and $2500 in interest on the owner's bill.
"The pendulum has swung too far and needs to get back to reality. The affordability debate may be an opportunity to address these issues without compromising house quality."
Councils point out that processing would not be delayed if designers provided the right details first off. Auckland City Council principal building officer Bob de Leur says the standard of detailing before Building Act changes in 2004 was "pretty poor" and "we still get designs that don't provide what we need to know".
But even de Leur questions the need for a building consent to shift a toilet or switch from a low-pressure to mains hot water cylinder. He says changes still to come - council inspectorate accreditation, product certification and builder licensing - should allow the red tape to be loosened and cost savings should follow. "Every thousand dollars we can save helps a young couple buying their first home."
The Government can only do so much. Its latest moves suit large subdivisions which increasingly are available only on the fringes of cities. With transport, infrastructure and environmental costs soaring, councils are trying to rein in urban sprawl.
But in established suburbs where people want to live, large sites are scarce and most new housebuilding is on constrained infill sites, usually built to the buyer's specifications.
In Auckland, where housing demand is greatest, the political leadership and town planning rules needed to ensure quality, affordable intensive housing in the right areas has been lacking.
"The biggest problem is the availability of quality land and the price of that land," says Tim Arlott, West Auckland franchise owner for Jennian Homes. "Just about everywhere in Auckland now the main subdivision site is 400 sq m. A lot of people wonder why they have to have X per cent of that in grass when they just want enough room to park the car."
He sees the best potential for savings in comprehensive developments on larger sites - with councils allowing greater latitude around consent and development contribution processes.
It's in this co-ordinated approach where the most potential lies - and that is promised by urban development authorities, common in Britain and Australia, which are now being looked at by Government officials.
Typically, they bring together central and local government agencies, property developers and charitable trusts to undertake urban renewal and large scale subdivisions, with affordable housing as part of the mix.
In New Zealand, they could tap into the incremental steps taken by the Government: streamlined consents, development levy waivers, affordable housing quotas, standardised designs, shared equity schemes. They could buy up land, amalgamating inner-suburb sites near public transport, shopping and commercial centres for well-planned intensive housing.
One model is already up and running - the Tamaki Establishment Board is advancing plans for 3000 homes on Housing NZ land in Glen Innes and Panmure, despite the unease of existing state tenants and nearby homeowners.
In February the Government announced a stocktake of Crown land holdings to identify potential housing sites; that study by Land Information NZ is still under way but Housing Minister Maryan Street stresses it isn't going to turn up sites as significant as Hobsonville air base, where 3000 homes are being built.
There are other hurdles. Auckland City Mayor John Banks does not see housing provision as a local body role and opposes "another layer of political correctness" in the form of urban development authorities.
Manukau Mayor Len Brown and Waitakere counterpart Bob Harvey, on the other hand, see considerable potential in housing agencies.
Street, who replaced Chris Carter as Housing Minister in November, is unbowed.
"We can't afford to think it's too hard to solve," she says. "We've got to have a go."
SOARING COUNCIL LEVIES ANGER DEVELOPERS
Few issues rile developers more than "development levies", which have soared in the past decade as councils moved to recover the full cost of providing services such as drainage, footpaths, roading and reserves.
Though councils maintain they charge on a cost-recovery basis, builders are suspicious the levies have become a revenue stream. In a submission to last year's housing affordability inquiry, the Registered Master Builders Federation cited the $30,000 charged by a northern local authority for a $40,000 kitchen renovation and a $300,000 bill from a central North Island authority for a $1.2 million motel complex.
The first bill had "no reasonable connection to any infrastructural impact" while the second was disproportionate to the council's costs, the federation claimed.
"In our view [development levies] have become an un-managed and un-monitored revenue collection mechanism for local authorities with a significant impact on home affordability.
"Because local authorities have not wanted to face general rate increases to fund required infrastructure work, [levies] have been used instead."
When introduced, the levies could be challenged in court under the Resource Management Act but, according to Master Builders, a 2002 law change means councils no longer have to justify them.
Federation chief executive Pieter Burghout told the Weekend Herald a "back of the envelope" calculation showed that each $10,000 of regulatory charges had only 1 per cent impact on rates but a 5 per cent impact on the cost of housing.
Variations in charges between councils have attracted the attention of the Government's House Price Unit, which reported this month. According to the report:
* Porirua charges a $5228 "recreation and civic development contribution" for each new dwelling.
* Tauranga charges between $11,850 (plus 5.9 per cent of land value) and $32,750 (plus 3.4 per cent of land value) per subdivision lot.
* Christchurch costs are rising from $13,000 to an intended $25,000 per lot by 2010.
* Auckland City has increased charges from $7000 in 2006 to potentially up to $40,000 per unit, including higher charges for inner-city residential development.
Tim Arlott, Auckland West franchise holder for Jennian Homes, says the levies are reasonable in principle.
"If you profit from a development, I don't have a problem with part of that being diverted to help the city - but it does appear to be a slightly bigger animal than that now. $30,000 to $40,000 is an awful lot of money to fork out in order to put another dwelling in."
The House Price Unit noted the "inconsistency" in charges between authorities and developer concerns that charges are made for benefits which accrue to the wider community.
But it says further work is needed to understand their impact on the cost of new housing.
Some relief may be in sight. The Housing Affordability Bill gives councils scope to waive the levies in return for benefits such as affordable housing quotas within subdivisions.
