Policy may not be good deal: Hargreaves

Friday 23 November 2012

Parties proposing policies aimed at getting first-home buyers into houses must be sure they are actually doing them a good turn, one property expert says.

By The Landlord

Professor Bob Hargreaves, of Massey University, is responding to news that, if it were in power after the next election, Labour would introduce a 10-year building programme, called KiwiBuild, to deliver 100,000 homes that would sell for about $300,000 to first-home buyers.

The properties would be a mix of standalone houses and apartments.

Hargreaves says most first-home buyers opt for second-hand homes because they represent better value. “At times the price of a six-month-old house is way less than a new property.”

He said while the price of new houses would not come down much, the price of second-hand homes could fluctuate a lot.

The cost of a new home would be two-thirds the house and one-third the land.

“My reservation is that [Labour’s policy] may not necessarily be doing them a favour if they are better off to buy a second-hand house.”

Laurence Murphy, of the University of Auckland, said Labour’s ability to deliver on the proposals would depend on the relationships it developed with property developers and their ability to get land.

“They’re assuming a large build will start quite quickly in Christchurch and hoping there will be that capacity in the industry coming up from Christchurch.”

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