The government announced today some changes to building which might help to make houses cheaper. House prices have risen sharply in recent years, making it hard for young people to buy their own house. Mortgage rates have gone up too.
It has been a long tradition for New Zealanders to buy their own home. Twenty years ago, 74% of New Zealanders owned their own home. Today, this has come down to 67% and it looks as if this percentage could drop even more with the cost of new homes.
One of the reasons for the high cost is red tape. Red tape means all the laws and the paper work that is needed to get permission to build. It takes time and it costs money. If you want to build a house, you have to send your house plans into the local council for them to check the plans. You have to pay for this and wait around 2 months if you are lucky. Sometimes you have to pay a lawyer to help with all the red tape. Building inspectors cost money too. They check the house several times while it is being built, to make sure that the work is done properly. Even if you want to make small changes to an older house, you must get permission and pay the council.
There was a big problem a few years ago with houses that were not well built or checked properly. Rain water got inside the walls. These homes were called “leaky homes”. Owners did not notice until it was too late and the walls became soft. Because of this problem, the government brought in more laws about the kind of materials that are used and the way builders have to protect the house from the weather. All these laws have made the cost of houses more expensive.
The changes that were announced today might help a little. Builders will be able to build many houses with the same plans. They will need only one request for permission. Also, some houses will be much simpler so that it will be easier to get permission and will not take so long. The government has already set up a plan for cheaper loans for first home buyers.
All these things sound good but the main reason for the high cost of homes is the price of land. These changes today will not change the price of land. |