REAL COST OF BUILDING

Evening Post, Volume CXXIII, Issue 101, 30 April 1937, Page 8

REAL COST OF BUILDING

The deputation which interviewed the Acting Prime Minister and Mr. Lee regarding house building directed attention to aspects of the housing policy which call for early consideration. These are: the decline in building by private enterprise since the Government scheme was announced, and the share of work secured by the small builder. On the second point Mr. Fraser gave an assurance that the Government wished the small builder to have a share in the work. We do not doubt this, but the problem presented is an illustration of the old saying: "You get nothing for nothing and little for sixpence." If there is economy in mass construction and if the Gov-j eminent decides to obtain that economy, those who have operated on a small scale are likely to suffer. A place may be found for them, but not without difficulty. Any expectation that all the small builders can be engaged in private building and the Government can undertake mass construction is not likely to be fulfilled. As the deputation pointed out, private building has declined. The remedy proposed by a member of the deputation— cheaper money and bigger advances for private persons desiring to build —is not a complete one. Private persons are not building so much as formerly because they are uncertain of the return. The investor who might build to let (in spite1 of possible'future restrictions on rent) will not do so if his return is liable,to be governed by rents ruling for Government houses paid for with a cheap money issue and built with ■ the economy of mass construction. We do not know what the Government pays the Reserve Bank for housing finance, but if the rate is 3 or 2| per cent, no private investor is likely to be satisfied with that. -Again the person who might build a home for his own occupation, using his own savings and borrowing on mortgage, may hesitate to do so if he sees a prospect of renting a Government house on. easier terms with no responsibility. The Government housing scheme presents undeniable advantages, but it will not be all gain unless the conditions are such that the private investor is not deterred from building. If the private investor leaves the building industry some of the Government houses will bo in replacement of the homes that would otherwise have been erected by private enterprise. The net increase in housing accommodation will be less than if the plan had been devised to provide Government houses and also assure the private builder a fair return for his enterprise.