03-01-2013

Smaller profit in small homes: Colliers

Landlords.co.nz

1. News
2. 2013
3. January

Sales of three-bedroom homes made up more than half the market in all parts of Auckland except the central city, where they were 37.9% of sales.

But Colliers national director of research and consulting Alan McMahon said bigger houses were being built because they were the most profitable.

“It is not the responsibility of private property developers to provide affordable housing. Their job is to maximise profits, and they do that very effectively by the giving that section of the market that can afford to buy, what it wants.”

He said there was a danger that if the Government opened up more land for development – as has been proposed as an affordability solution – it would be developed into a price point that only enabled existing home owners to buy.

“Generally speaking these sites are well suited to this form of dwelling as the market will not find medium or high-density housing attractive in these somewhat remote locations.”

He said the Government should prioritise the release of land that was closer to the CBD.

“Developers will not reduce their prices unless they have to. If the consequence of more efficiently processed resource consent applications is less overall cost and time to develop, then the initial impact will be that developers make more profit.”

McMahon said local and central government would have to direct development towards affordability through zoning.

Source: Landlords.co.nz