Labour’s housing policy falling apart

The media are starting to realise that Labour’s policy to build 100,000 houses for under $300,000 is out of touch with reality. It simply can not be done. Labour have in fact been proving this themselves with their photo ops.

First Shearer visited some affordable housing in Newtown as an example of what they will provide. But the houses there were not $300,000 but $495,000.

However, at the Newtown development Mr Shearer saw first-hand how expensive even entry level housing can be. The four four-bedroom homes he visited were each valued at $495,000.

So he tried again.

Opposition leader David Shearer got a closer look at what houses built under the Kiwibuild scheme could be like today. …

Shearer spent the morning touring New Zealand Housing Foundation properties across Auckland to promote the policy by illustrating innovative projects already underway.

The foundation is a charitable trust that helps low to middle income people into houses through a range of shared equity programmes.

His second stop was in Mt Roskill where he saw larger homes worth $400,000-$500,000.

”A lot of people are asking what can you build in Auckland for that money. We’re saying if you can build these here so close to central Auckland, we should be able to build much bigger homes if we’re doing it en masse.” 

Yeah the Govt will wave a wand and homes will both be bigger and cost less, under $300,000.

The foundations properties are an excellent example of what could be built under Kiwibuild, MP Phil Goff said.

”These are at the higher end for middle income families, but there are still about $100,000 cheaper than most houses in Auckland.

Yes the foundation properties are cheaper. In fact they even do have some homes for $300,000. But do you know why?

They are already being subsidised by the taxpayer. From May 2012:

The majority of the new projects are in Auckland, with the New Zealand Housing Foundation receiving the largest share of funding with $8.86 million to build 68 homes in West Auckland, Takanini, Mt Albert and New Lynn, and a further two in Kaikohe in Northland.

That is an average of $130,000 subsidy per home. Now Labour are saving they can do houses for under $300,000 with a mere $15,000 capital per home. Their numbers are so out of kilter with reality that I don’t think it is too harsh to call them a lie. There is just no way they can make it happen unless they can reduce the cost of land to $50,000 a section. Ironically they oppose almost every initiative to reduce the cost of land and consenting building on land.

Shearer’s credibility on this was savaged on 3 News last night:

Labour leader David Shearer hit the streets today, on a mission to prove his affordable home policy will actually work.

But one of Auckland’s top property experts has offered Mr Shearer some advice: start buying caravans, because it’s not going to happen.

Publicity stunts don’t always go to plan, and Mr Shearer found that out today as he showed off a low-cost subdivision.

Just over a week ago Labour announced, if elected, it would build 100,000 homes – many in Auckland – selling for just $300,000 each.

Construction costs would make up $220,000-250,000 of that, leaving just $50,000-$80,000 for the section.

When asked if he knew the average section price in Auckland, Mr Shearer says, “it depends where the section’s going to be”.

The average section price in Auckland is actually $300,000.

It is simple – we need to reduce the price of land. The supply of land is artificially constrained. Labour are against increasing the urban land limit in Auckland, so section prices are not going to decrease – and only on Planet Labour will you get land for $50,000 – not just one or two pieces of land – but 100,000 sections!