Building Industry ‘Singled Out For Special Attack'

Press, Volume CVII, Issue 31384, 1 June 1967, Page 1

Building Industry ‘Singled Out For Special Attack '

(New Zealand Press Association) WELLINGTON, May 31. The Government’s measures to restore economic stability were having repercussions on all sections of the building industry far beyond any envisaged or intended, the Master Builders’ Federation said tonight in submissions to the Minister of Housing (Mr Rae).

The submissions said the industry, because it was a capital development industry, had been singled out for special attack in time of economic difficulty. “Once the economy starts going down, it is extremely difficult to reverse the process. The federation’s fear is that it is already too late,” the submissions said. It was apparent that the immediate cause of the decline in home building was the present economic situation and uncertainty about the future. But there were other contributory factors. These were: State Advances first mortgage limits were too low; second mortgage interest rates were too high; there was a lack of finance to bridge the gap between the homeseeker’s funds and mortgage money available; and sections were too expensive. “SPECIAL MEASURE”

“There is little doubt that what are intended to be general economic restraints become a special economic measure applied to the building industry. “The industry accepts its responsibility to share the economic restraints placed on the country as a whole, but conversely it rejects the current situation, where it is being called upon to absorb the

brunt of the economic meas- i ures. “If this situation is per- : mitted to continue, it is the ' federation’s opinion that the already deteriorating position will continue tb worsen and : that the Industry will be faced with its most serious crisis since the Second World War.” The federation said the evidence showed that since the beginning of the year enquiries had fallen between 30 ■ per cent and 40 per cent. “This has yet to be reflected ' in the building permit figures : because of the time lapse between loan enquiry and Job commencement, the latter co- 1 inciding with the building permit SPECULATIVE BUILDING 1 “Some builders have been < offsetting the fall in home : contracts by building specu- ' lative houses to maintain ’ their output. Unfortunately, these houses are not finding ' a ready market and it is ob- ' vious that builders will be I forced to desist from this ; form of building until the i market improves.” The National Housing Coun- 1

cil last year assessed needs at 138,000 units before 1971, the figure for 1967 being 26,000 units. Permits issued fell short Of this by 2000 units and this was further aggravated by the continuing detitne now affecting the labour force employed on housing and by subcontractors and supporting industries. The rise in house building costs between 1957 and 1966 was 13.2 per cent—from 54s a foot to 62s 2d a foot—compared with a. 28 per cent rise in the consumer price index in the same period. Since 1957 the cost of sections had risen about 100 per cent. CAUSE OF INCREASE The federation thought that the major cause of the increase was the growing demand for better amenities by local bodies when new areas were developed. “This in turn inflates the value of subdivisible land, the availability of which is largely controlled by local authorities through town planning. “Local authorities are profiting at the expense of the

new-home owner, who has to pay for the complete cost of servicing his section in a new subdivision.” The federation said: The public must be made aware of available moneys. The Government should issue monthly information on the numbers of loan inquiries, the numbers of loans arranged, money available for loan, and the reasons for refusal of loans. The Government should increase loan limits and make additional money available or ensure adequate first • mortgage money from traditional lending institutions; or it should ensure that second mortgage money was readily available. The group housing scheme should be restored. In the long term the Government should investigate local bodies' subdivisional requirements and housing requirements in relation to the standard of housing.