26 Apr Stop raiding the cookie jar, slash house prices by fifty percent!
Thu, 23 Apr 2009 9:51a.m.
Stop raiding the cookie jar, slash house prices by fifty percent! I have been lobbying Government, the Auckland and Manukau councils for the past three years to do just that.
Reduce house prices for first home buyers by 50 percent and to date my requests have gone unanswered. They continue to raid the cookie jar to fund Band-Aid solutions rather than diagnose the cause, and put in place preventive measures.
“Generally speaking”, as there would be a variance between different areas throughout the country, when building a home the land and building cost are very similar. Entry level homes, for this example lets use Manukau and say land cost $180,000 and building cost $180,000 making total cost to build $360,000.
A house of that value based on current rental figures would rent for around $360 per week maybe more, a mortgage of that value $360,000 over 25 years @ 6.75 percent would cost $574 per week, again maybe more.
Doesn’t look good for first home buyers does it? In my opinion the decision makers are looking in the wrong cupboard for the answers.
The answer to the question, “how can we give the economy a much needed boost and help first home buyers in the process” is right under their noses. First, they need to close the cupboard door as they already have the tools, in fact, they have everything they need to get the job done sitting on the work bench in front of them and, there is already a blueprint in place, it is called “St Johns”.
No not the ambulance service, the “Suburb”. “Leasehold land”, yes the Government and or the Councils could lease the land to first home buyers for a nominal amount, or even defer payment for the first five years, which in turn would make housing that much more affordable and increase productivity, not to mention the massive cost saving for the Government as they would not have to continue injecting millions into housing.
Would it have a detrimental effect on near-by houses that where freehold? Not at all, does it in St Johns? No! Does it make houses more affordable in St Johns? Yes! Wouldn’t it be great if first home buyers could afford to invest in their own home for less than they pay in rent?
Would that give them a sense of added worth? $180,000 over 25 years @ 6.75 percent = $287 weekly $180,000 @ 2 percent interest only = $70 weekly Total above = $357 weekly Actually there is a lot more at stake here. Something like this could be the turning point for many families and the impact it would have on the country as a whole would be colossal. Why then are the decision makers taking little or no notice?
Maybe it is because I didn’t attach an invoice to my emails, ‘consultancy fee’ $250,000. Please feel free to post the cheque if that is what it takes to give the project the green light. And please, don’t dare tell me “we have no land”, I go flying with my stepson and we see more green than blue, so let’s make better use of our resources.
Regardless of what you do or don’t do for a living, for just one minute stop and think, how would a building boom of this magnate affect you right now? Monitored, it could be the best thing this country has ever seen. Whilst the rest of the world is at a loss as to what to do, we could be building from the ground up, literally We have resources in abundance, land, timber, willing workers and, a line of people eager to take ownership of the end product, affordable housing.
Brian Dalley is a qualified NZMBA Mortgage Broker, Property Investor and former Real Estate Agent. You can read more of his views and opinions on his website www.propertyprofit.co.nz
Source 3 news.co.nz