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Author John Kenel15 November 2018

Expert Opinion

The Rising Cost of Building

Here’s a comment from the BNZ’s Tony Alexander. He’s right on. We start a new development every month, and every time it costs us more and takes us longer than the last development did. Most of the additional time and cost is due to more detailed, more complicated rules. It’s frustrating for us as developers, but great for existing property owners as the value of their property is forced up.

From Tony:

“Column of the week prize I give to a tiny piece by Damien Grant in the Sunday StarTimes. His spot on argument is that the housing crisis is here to stay with a key factor being the restrictions on uses to which land can be put, the arduous drawn out processes needed to change anything, and the deeply detailed yet confusing rules involved in putting a house up.

New Zealand has regulated itself into a corner in the construction sector. In this new world we are increasingly concerned that anything we do might upset or offend anyone on the planet or someone on behalf of someone they think may take offence, and more legitimately anything with environmental impact is more and more regulated (rightly).

It is hard to imagine anything other than that the rules will become more detailed, more complicated, more stringent over time. Construction costs will continue to rise. For instance, higher costs for dumping construction waste may be on the way. And that is a key reason why property owners can do best just to sit on what they own and wait for the rising cost of a replacement to deliver easy capital gain.”

Author John Kenel15 November 2018
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