Subdivisions in New Zealand

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New Zealand badly needs a lot of new houses,  as the immigration boom over the past few years has put a huge strain on the housing stock and caused a massive increase in the price of houses.

Every New Zealand City has their own set of problems, but in all cases what is really required is a lot more land to build on and the capability to build a lot more houses at a lot  lower cost than the current average. There are a set of  property developers throughout the country that are very high net worth, and have been able to purchase large Tracts of rural land on the outskirts of all the large cities in New Zealand, in anticipation that new land will be urgently required for subdivision at some stage in the future. This process is called land banking, and it makes the property developers very wealthy because they are generally able to purchase the land for song in comparison to the price of the front of subdivision. The downside is that it drives up the cost of land enormously, and it also means that there is always a shortage of land because that is their intent, and hence there is a large sector of the population who are just simply not able to get themselves into their own home.

Government policy is at fault here, because it’s simply allows this land banking to go on unrestrained while the demand for new houses increases almost exponentially. A brave government would put a halt to this process by forcibly purchasing the land and carrying out your own massive scale build program. Landbankers theoretically take quite a risk when they buy this land upfront, but the risk is very low in New Zealand because there will always be a market for this land down the track, and the price will always be very high.

Is the government threatened the land bankers that they would purchase the land compulsorily and it’s current rural value unless the land was developed within a short time frame, then this would have the effect of a large quantity of new sections coming on the market in a hurry, because otherwise the developers would stand to make only a very small amount of money from the government purchase. A good feature about such a plan is that was such a large number of new sections coming onto the market over a relatively short time frame,  the price of the new sections will be lower then they are currently. If a handful of very large builders can also start manufacturing completed house panels, then an entire house can be erected in a matter of a day or two, which will mean that a  much higher number of new houses can be built for roughly the same amount of labour. This will also have a  big impact on the price of the finished house, probably around 30% cheaper than a house built with current normal techniques.