House Prices And Housing Costs

Press, Volume LXXXVII, Issue 26514, 31 August 1951, Page 8

House Prices And Housing Costs

The Labour Party is evidently retreating from the somewhat vague suggestions in the early part of the campaign that it had a new method of controlling property values. In his policy speech, the leader of the party (Mr Nash), after deploring the lifting of land sales control, said he hoped he would have the opportunity of putting things right. The president of the party (Mr Nordmeyer) some weeks ago said it would not be possible to restore the former system of controlling urban values, “ but I believe that other “ ways must be found ”. The Labour Party has since found that the “ other ways ” are, in fact, much the same as those of the present Government; and Mr Nordmeyer now says that “ Labour has no “intention of instituting land sales “ control through a Land Sales Court “or otherwise ”, The Labour Party apparently pins its faith to its election promise to build 100,000 houses in five years, although no indication was given as to how Labour hoped to double the building average in its post-war years of office. This vagueness in the Labour policy and Labour’s actual performances may be contrasted with the performance of the Government in its brief term. Under the present Government more houses were built in one year (16,400 in 1950-51) than in any previous year (15,800 in 1949-50); and much larger quantities of timber and cement were available to the building industry. In addition, the Government has now arranged to import 3000 prefabricated houses, which, with the present rate of housing construction, will bring the number of new houses this year to something like the Labour Party target. If the supply of houses is a sound method of keeping prices down, the Government’s policy and achievements are more impressive than those of the Labour Party. On the other hand, an ample supply of houses will not alone keep prices down. “ The ridiculous prices ” mentioned by Mr Nordmeyer are not, as he seems to imagine, the result of an orgy in speculation. The biggest factor in the rise in prices is that values have been allowed to come into line with building costs after having been held down artificially while almost all other prices and wages rose steeply. The cost of building a new house almost automatically fixes the price of an old one. To build more houses at very high prices will not help to reduce the values of existing houses. The National Party candidate for Hutt (Mr J. W. Andrews) drew attention to one aspect of the cost of new housing when he said it took 10 man-hours for each square foot in New Zealand compared with three manhours in Los Angeles. It should not be supposed that carpenters work three times as hard in California (though they probably do work harder); and there are many other possible reasons for this unfavourable comparison. But the disparity does suggest that the best way of attacking house values is not through the Land Sales Court, to which Labour thoughts wistfully return, or through “ other ways ”, if that means regardless of cost; but by trying to hold down costs of building. This is another reason for welcoming the importation of the prefabricated houses. They will afford a basis of comparison for New Zealand costs. By relieving the demand, they will also permit the use of resources, now uneconomically used to build dear houses, for factory and other buildings that are urgently needed, thus helping to restore the balance in the construction industry. It should not be forgotten that Labour in office showed no enthusiasm for prefabricated houses: and now Labour goes no further than to promise to import materials “not “ available locally ”, which may be interpreted to mean that building materials will be subjected to the restrictions and delays of import control. Nor will Mr Nash’s inflationary programme help to make houses cheaper.