On the KiwiBuild side, the fact that over 20,000 people have signed up to be in the ballot for one of the affordable houses if and when they eventually get built tells us only one clear thing. You cannot build your home ownership plans around securing a KiwiBuild property. Your chances of getting one are shrinking by the day as the logic of absolutely everyone who is eligible signing up sinks in. It’s a lottery and if you beat the odds and win you will get a property you’ll only need to hold for three years then will be able to flick off probably at a decent profit – or hold off for five years then get that profit tax free.
KiwiBuild is a good idea, but it doesn’t change the essential dynamics of our residential construction sector which consist of many little, inefficient operators purchasing from oligopolistic material suppliers, dealing with obstructionist councils increasingly terrified about getting anything wrong, shortages of skilled and unskilled staff, and shrinking availability of finance as pressures keep growing and growing for banks to do less and less risky lending while holding more and more capital.
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By Tony Alexander, Chief Economist for the Bank of New Zealand. The above is an excerpt of Tony’s Weekly Overview of 12 July.
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