The price is wrong

The price is wrong But Ling's reference to "our market" suggests an all-too-comfortable dominance of New Zealand's construction scene by Fletcher. It also points to a lack of innovation, a shortage of management skills and inefficient tendering systems. First-home buyers are increasingly locked out of the market (home ownership rates have fallen from 75% in the early 90s to 65% now). It's no secret that overblown property values have serious and wide-ranging knock-on effects. These are problems not only in relation to new house construction - they also directly influence the cost of maintaining and renovating older homes. The commission also cites research showing the labour productivity of the building and construction sector in 2001-06 was just 72% of Australia's. A survey of homeowners who obtained building consents for residential building in 2005 found almost one in five ended up in a major dispute over their project, often on account of poor workmanship or a failure to meet contractual obligations. Close to 50 % reported the final cost ended up being greater than predicted. There are several complex reasons for the high costs and underperformance of the construction industry, including its dominance by one-man carpentry firms building bespoke homes who lack economies of scale. Precious capital is directed into servicing massive mortgages and away from more productive endeavours such as new company investment. In the latest contribution to the home-affordability debate, the Productivity Commission has released the results of a major investigation, which has received attention mainly for its controversial proposal to free up more land at city fringes for new housing developments. The commission compared the prices of 15 building materials, ranging from bricks and insulation to framing timber and plasterboard, and found 13 were cheaper - in most cases substantially - in Australia than here. Companies seeking to have new products accepted here must first win the approval of building consent authorities, that can be a time-consuming and uncertain process. Of particular interest is the commission's estimate that the cost of house construction is an extraordinary 15-25% higher here than in Australia. Policymakers have been groping for answers to the problem of unaffordable housing since the mid-2000s, when the property market was in the throes of a boom in which house prices doubled. And because New Zealand is small and geographically isolated, it has traditionally had little appeal for international manufacturers. The cost of building a mid-range home in Auckland, for instance, is about NZ$1650 a square metre; to build a similar home in Melbourne costs NZ$1175 a square metre, in Brisbane NZ$1209 and in Sydney NZ$1309. The price is wrong Trade News selected by Local Linkup on 07/05/2012