HOUSING SHORTAGE

Dominion, Volume 29, Issue 139, 7 March 1936, Page 11

HOUSING SHORTAGE

Problem of Finance the Root Cause LITTLE MONEY TO BUILD Behind the acute shortage of houses in Wellington, as in most other parts of New Zealand, lies the involved problem of finance. The demand exists and an ample number of sections in good localities at reasonable figures are available, yet only a fraction of wouldbe home owners can build because few people have been able to save sufficient for a substantial deposit.

This was how a prominent Wellington valuer summed up his view why, despite the encouragements of the building subsidy, the supply of new dwellings is hardly making a definite impression on the demand. “Many builders—or rather, those who have survived the depression—who are anxious to undertake a vigorous policy of house construction cannot get second mortgage money and people want to build by putting down £5O or £lOO, which will not do these days,” he continued. “If some genius would come along and say he could lend up to within £lOO of the contract price of a house with safety, building, of course, would be stimulated and the shortage rapidly overtaken. The whole difficulty is finance. How it is going to be done without loss is the problem. But many hundreds of thousands of pounds have been lost through second mortgages and many builders have been ruined. Except in few Instances second mortgage money cannot be obtained, Consequently builders are requiring substantial deposits on new houses when they are not in a position to perform the financing themselves, and arc not building in a speculative way.”

He went on to say that compared with two or three years ago building costs had already risen to a point where they were only 20 per cent, below boom costs, and before long they would touch boom figures again. Any form of State assistance had the effect of increasing prices, and the building., subsidy was no exception. Soon after the subsidy was announced the prices of timber and supplies generally began to advance. A similar thing occurred when the State Advances Department began its huge lending policy a few years ago. Subsidy Too Low.

He criticised the Government's decision to limit the building subsidy to dwellings of a contract price of £7OO as being too low for any practical benefit. to building. The limit should be increased to a minimum of £OOO, as only a “slump kind of house” could be built for the lower figure. If the Government could devise some scheme to stimulate building, and at the same time keep costs down, it would be doing a commendable national service. A land agent confirmed the statement that new houses were hard to obtain for letting purposes and that the demand greatly exceeded the number offering. Compared with a year ago, he said, rents had "hardened from 5 per cent, to 7J per cent, for the better class of house. Rents would continue to move upward until something was done to initiate a housing scheme on a comprehensive scale.

Another agent said that' rents in V'ellington were merely obeying the l.iw of supply and demand. In the last two or three years many families had loved to Wellington with the increase Lu the number of State officials following on the creation of new Government departments, through the opening of new businesses o r the increase of head office staffs by commercial organisations. House building had been at a standstill until recently with the result that th e shortage of good habitable dwellings was serious. It was Inevitable, therefore, that the scramble for accommodation should result in rising rents for decent places. People coming to 'Wellington to settle viewed the rent position with dismay.