Monday, June 20, 2016

Building lotsa Houses Fast

There's a win-win-win proposition possible. I've harped on aboot this for so many years that the words just write themselves. And there are of course, Trade-offs - this is a real-world deal after all.
First things first:
  • Gubmint is best at setting overall parameters, and a small amount of pump priming So the single overall parameter of note is multi-proof consented house designs, and the pump priming is getting one or more housing factories manufacturing those designs, at volume.
  • Multi-proofing the designs side-lines the stupid TLA's and their interminable and expensive consenting processes.
  • Getting a few House Factories up and running means some development incentives, and some volume: the former possible via e.g. tax or depreciation breaks, the latter via letting social-housing contracts for hundreds of houses to achieve short break-even times for aforesaid factories.
  • My personal favourite: staff these factories with re-trained and now unemployable TLA consenting wallahs. Instant productivity increase, This is, of course, not a compulsory feature. But oooh, wouldn't it be nice (to mis-use a Beach Boys lyric...)
  • Finance all of this via a combination of Stamp Duty, CGT and swingeing differential rates on buildable but bare land - could even be relatively small net cost compared to the increase in social utility via warm, snug (of which more later) and cheap houses.
Ah, those trade-offs:
  • Accept that small, highly modular designs are all there is. Small = less cost, modular = able to be cranked out by automated machinery in factories.
  • 'All there is' means abandon architects, consultants and the plethora of ticket-clippers who infest the building industry as currently constituted. If any of these types find themselves unemployed, into the Factories with 'em...
  • Alter district plans top-down, by building into the NPS the requirement that houses produced this way override district plans, NIMBY's and BANANA's and the production thereof would constitute Compliance with the NPS. This accords with the rising realisation that Awkland could well sink the rest of us if left in the bumbling hands of ACC i.e. it's an issue of national significance
The target would be not less than 15-20,000 such houses per annum, over the next five years. As Christchurch demonstrates in spades, flooding the market with lotsa land and building lotsa houses (and, BTW, doing it the old-fashioned way, with occasionally drug-tested hammer-hands clonking frames together out in the weather) has screwed house prices to affordable (barely) levels through the Magic of Markets. Doubters can consult and try Faringdon: house plus land start at $419K.
I've no doubt that this is doable. It just takes the will (and the cojones and vertebrae amongst politicians of all stripes). Aye, there's the rub........(Awkland Unitary Plan pun included for your delectation)....

Thursday, June 02, 2016

Why RBNZ can't solve the Auckland Housing Bubble

Common taters who pooh-pooh the effect of Supply are ignoring the Christchurch experience.
There, a CERA-led Land Use Recovery Plan got a whole lot of large subdivisions moving toute suite, and it's possible to buy a section in (say) Rolleston, one of the new growth centres, for mid-$100K. Example: Faringdon Or try a wider search:
Read that, Awklanders, and weep into your cereal.
The solution to housing unaffordability is a complex, multi-year deal, completely out of the reach of the hapless RBNZ. Consider the following non-central-bank actions needed:
  • trust-busting action over the cosy building-materials cartel duopoly, to lower material and hence build costs
  • elimination of zoning and other Brit Town and Country Planning artefacts: zoning, amongst other evils, causes Commuting, as living and working are forced to separate areas by planning fiat.
  • Encouragement of modularised/factory built housing - CNC gear, tight tolerances, built under cover by certified workers. Not bashed together on site by occasionally drug-free hammer hands and left to stand unprotected in the weather for weeks at a time. Unemployed Planners could usefully be press-ganged into such factories - win/win/win
  • Self-builds and other sweat-equity schemes could be revived. The current crop of regulation is unlikely to cost much less than $50-100K per dwelling, once fencing, scaff, fall protection, lost time, etc etc are accounted for properly. But it's All fer yer Own Good, little serfs....If we reverted to the situation of 15 years ago, when practically none of this crap existed,.....
  • Reform TLA regulation by introducing time-money into the equation and make them responsible for accounting the opportunity costs they impose. Time costs, incremented at IRD's UOMI rate, would be a start. TLA's inject time into every process imaginable, and currently have zero awareness of, and thus have zero accountability for, the costs they thereby force onto others. Time for some transparency.
  • Bring in friction to the sale process: stamp duties, CGT, whatever. A Tobin Tax if you will. In a similar vein, make TLA's tax the living bejasus outta unimproved but buildable land. They can do this by a simple differential rate, Ten or fifty times the going rate would claw back some the unearned CG the land bankers are squatting on, and might help to get something Built on that bare dirt.
Precisely none of the above can be done by Aunty RB.
It was done in Christchurch by emergency powers - benevolent diktat if you will.
Fat chance of anything happening in a national sense though.
That would take pollies at Gubmint and TLA level with the correct combinations of brains, thick skin, cojones and vertebrae. No such animal exists, despite extensive Attenborough-type searches over the years.