Regulation-the Real Cause of High House Prices

Owen McShane tells us the REAL reasons why house prices are so high. It seems socialist governments have been regulating the market to ensure that the poor are priced out of the market while the rich make huge capital gains on their property.

Typical socialists-impoverishing those they profess to champion.

Hat Tip Not PC

The data [in 1996] showed that the cost of actually building a house had been falling over the previous few years because of a deregulated market which reduced material and equipment costs. Furthermore the cost of “constructing” residential subdivisions had fallen too, in spite of increased environmental standards. The competitive electricity supply market [for example] had dramatically reduced the price of supplying cables to sections compared to the old monopoly days.

However, recent data now reveals that house building prices have been rising for some years mainly because the restraints on land supply mean that all our house builders are now “Cottage builders“. Our home builders can no longer access long term supplies of land. One surveyor took me to look at a major development outside of Wellington and pointed out that “Everyone of those trucks distributed around the development is a cottage builder’s head office.” This has a major impact on bulk purchasing and management of supply, and overall efficiency.

Then of course the addiction to Smart Growth density has led to a wave of leaky buildings which has now generated a new wave of “gold plated” building codes. And everyone seems to believe we can promote “sustainability” (whatever that means) by adding up front costs with proposals for more insulation, solar water heating and double glazing and anything else which seems like a good idea at the time.

The impact of the building codes hits earlier than you might think. Real Estate agents are now of the view that the existing housing stock is undervalued because existing houses cost so much more to replace. Hence even as land prices fall the price of the total package may hold up for a while.

This will be described as “a strong housing market” rather than the last gasp of a dreadful set of policies which have done, and will continue to do, extraordinary damage to the economy and those struggling to make ends meet.


Author: Admin

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