Money is not the problem. It is rather the lack of capacity to actually build these new homes, irrespective of how much money is thrown at the problem. The lack of capacity is undoubtedly driving up costs so that the proportion of new homes that are genuinely affordable is probably falling. In other words, new housing initiatives are caught in what looks to be a vicious downward spiral.
Others have analysed this issue extensively and it is not the purpose of this article to add to that analysis.
But underlying the debate about providing new housing is another issue, which is equally as important and is an integral part of finding overall solutions to the provision of new housing. The issue is that of the quality of our housing stock, including new homes.
It transpires that the quality standards in our Building Code are relatively low compared with most other developed countries, and this is reflected in the relatively low standard of much of our residential building stock. The seemingly endless drama of leaky buildings is but one manifestation of this, as is the appallingly low standard of many of the repairs made to earthquake damaged buildings in Christchurch. Stories also abound of people condemned to living in cold, damp houses which are a breeding ground for health problems.
There are I think multiple causes for this situation which go beyond the simple issue of the adequacy of the Building Code. Two key drivers are the pressures created in the housing market by the desire of New Zealanders to own their own home (still the case for many young people despite the fall in home ownership relative to renting in recent years), and the tendency of many New Zealanders to have a relatively short time horizon when looking at the suitability of homes for purchase.
This means that too much emphasis is placed on the initial purchase cost rather than the cost of maintenance 20 or 30 years down the track. This in turn creates pressure for minimising building costs by using short term solutions to building design and construction, compounded by what seems to be a significant failure of the relevant regulatory systems to prevent unsatisfactory building practices and results.
On the face of it the cure is simple – we need to have minimum standards which are appropriate to building new homes which provide a healthy environment for the occupants and will have an acceptably long economic life (free of major maintenance or replacement costs). However, it is not that simple. There are practical difficulties because already stressed capabilities will be asked to perform at a higher level – this applies particularly to building construction and to the provision of effective regulatory oversight. If nothing is done to relieve the stress, the risk is that performance will actually decline.
A key consequential difficulty is that the achievement of higher standards (assuming they are achieved) is very likely to lead to increased costs – leading in turn to a decrease in the affordability of new homes and a reduction in the number of new homes able to be produced. That is not an outcome that is likely to be acceptable – least of all by the Government in respect of its targets for numbers of new houses.
The implications of these constraints is that, particularly in the short term, increased quality is only likely to come at the expense of decreased quantity – in other words we can’t “have it both ways at once”.
Is there any way out of this bind? I think there is but it will require purposeful intervention by the Government – purposeful meaning more than simply providing more funding.
I think the starting point is the setting of higher standards, but this needs to be prefaced by analysis of the cost-effectiveness by which alternative standards and levels of standard can be achieved. We need to be pragmatic and go for the “low hanging fruit” as a priority ie initially choose measures which have a high benefit to cost ratio.
There needs to be a better appreciation of what “affordability” means in practice and strategies adopted which explicitly avoid degradation of affordability while meeting higher standards. This is very much a design issue and could for example impact on the choice of materials, the adoption of more cost-effective designs, and of course most obviously smaller houses. Designs which lend themselves to more cost-effective building practices should also be explored.
More cost-effective ways of achieving regulatory oversight need to be explored. For example, it probably needs to be accepted that access to appropriately skilled staff is likely to be an ongoing issue for regulatory bodies, especially at local level. So, the skilled staff that are available need to be used more effectively, most probably through the adoption of a more evident risk-based approach to inspection. The focus should be on areas of higher risk, eg developers or builders with an unproven or poor record, and unusual or difficult designs.
All of this will have a cost to the Government, but it will be a modest cost relative to the value of the building programme required.
It will take time for measures such as those set out above to be developed and applied so the final requirement is for an overall strategy which integrates the implementation of these measures with the progress of the building programme. The availability of resources also needs to be factored in.
Inevitably this will mean a slow start – which we have anyway – with a gradual acceleration occurring which reflects the realities of rolling out the measures suggested and easing resource constraints. However, this approach does provide a fighting chance of getting quality improvements while achieving quantity targets in the longer term. In other words, maybe, we will be able to “have it both ways at once”.
This is another of Bas Walker’s posts on GrownUps. Please look out for his articles, containing his Beachside Ponderings.