The Eye of the Fish

May 19, 2018

New State (houses)

We’re now six months into the Adern-led government, and this is the first real stab that Labour et al have had at solving the Housing Crisis. I’m keen to explore what the details of this budget mean to us, i.e. to the architecture, building, housing community. Disappointed that so far the main stream media haven’t really tackled this yet. Commenters have, of course, been quick off the mark, in their usual clueless manner, complaining that Kiwibuild hasn’t delivered any new houses yet, complaining that the houses announced so far aren’t enough, and generally complaining that somehow Phil Twyford hasn’t solved 20 years of neglect overnight.

But I am a little confused about the numbers announced so far. I’ve seen three key numbers, and am wondering how they all go together. Perhaps you can help?

First number is 6400. That’s how many houses the Kiwibuild scheme aims to get built. Apparently, over 4 years?

The second number is $234 million. That one, we hear, is for building houses. Perhaps it relates to the first number. But if you divide one into the other, that makes $36,562 each. And 50c. Which, as far as I know, isn’† enough to build a house. At a build cost of, say, an extremely tight $2000/m2, gets you just over 18m2 of house – which is a single room about 4m in each direction.

Lastly, there is a couple of billion. Almost three. It’s $2.9 billion in fact. Apparently, that is the amount that the Housing Corp are going to borrow, which works out at $453,125 each. That’s enough to build a house, but not enough for the land in Auckland.

Can anyone help explain please? Phil? Grant?

21 - 05 - 18

apparently $2.1 billion was allocated to housing in the previous ‘mini-budget.
There’s a bit of an explanation here, too:

21 - 05 - 18

Contains comments such as :
“$2.9 billion of that funding will come from third parties investing in a new bond issue from Housing New Zealand.
Additional funding will come from Housing NZ carrying over $900 million of its operational funding for the build and an additional $234.4 million allocated in this Budget.”

21 - 05 - 18

I’m pretty sure the reasoning is the funds can be recycled as homes are built and sold, e.g. if it costs $650,000 for land and construction, that $650,000 should be able to be re-used 3-4 times in a four year period as properties are sold and the funds are freed up again. Or even more in the unlikely event they make a profit on any of these homes…