Property

Small cities have big development costs

Some of the most expensive places in which to build in New Zealand are not the big cities with highest demand and dearest house prices.

Wednesday, July 17th 2013

Whangarei, the Kapiti Coast and parts of Hamilton are charging development contributions on par with those in Auckland and Christchurch.

Each council was asked how much it would cost to create a new property in an area where services were available but not connected.

Whangarei, which has an average house price of $292,500, requires development contributions for a new residential section of $20,834, plus GST.

Hamilton, with an average house price of $325,000, charges up to $30,000.

Auckland developers, who can expect to sell a house for an average of $618,000, pay $21,500.

Commentators say development contributions should be uniform throughout the country if the Government and councils want to improve the supply of affordable housing.

The contributions are paid under the Local Government Act and are intended to make sure councils have the money to pay for infrastructure such as stormwater and transport, open space reserves and community facilities.

Property Investors Foundation president Andrew King said development contributions seemed to be set arbitrarily: "If they can charge, they do."

He said the costs would be passed on to purchasers.

"It has a big effect on the cost of building and on house prices."

The Government is reviewing the contributions, and King said it needed to impose some uniformity.

The cost of the average development contribution has increased 360 per cent over the past decade.

Local Government Minister Chris Tremain said councils needed contributions to provide infrastructure to support new developments, "but we also need to ensure the costs are fair and well justified".

Property Council chief executive Connal Townsend said developers usually did not have a problem paying the contributions if they were going towards projects that would enhance a development and make it more desirable.

He said they should be consistent and it should be clear what they were being used to pay for. "A concrete pipe costs the same whether you are in Gore or Kaitaia, so the development costs should be around about identical."

Whangarei mayoral candidate Vince Cocurullo said the region's high development contributions were a stumbling block for growth.

"I have had several developers who have said to me 'it is too expensive and too hard to develop Whangarei'."

The Hamilton City Council said it was reviewing its policy and reduced charges for higher-density developments were proposed.

Comments

On Wednesday, July 24th 2013 9:48 pm John Paynter said:

Even more interesting, how are they justified for rural properties when you receive 0 services. You have your own tank water, septic system etc. You are levied separately in annual charges for roading. It is unlikely in many instances that you even go to the main town in the District for any services, such as library, as it is often more convenient to head to a city for your needs (as in my case) yet you are still levied annually for the upkeep of that town as part of your rates.

Most Read

Unity First Home Buyer special 3.99
ICBC 4.25
SBS FirstHome Combo 4.29
Co-operative Bank - First Home Special 4.35
TSB Special 4.39
Co-operative Bank - Owner Occ 4.45
ANZ Special 4.49
ASB Bank 4.49
SBS Bank Special 4.49
Unity Special 4.49
Westpac Special 4.49
TSB Special 4.49
ANZ Special 4.49
ASB Bank 4.49
Co-operative Bank - Owner Occ 4.49
Kainga Ora 4.49
BNZ - Std 4.49
Kiwibank Special 4.49
SBS Bank Special 4.49
AIA - Go Home Loans 4.49
Wairarapa Building Society 4.59
Nelson Building Society 4.59
ICBC 4.99
BNZ - Std 4.99
SBS Bank Special 4.99
Kainga Ora 5.15
ASB Bank 5.15
AIA - Go Home Loans 5.15
Co-operative Bank - Owner Occ 5.19
Westpac Special 5.29
TSB Special 5.39
Kiwibank Special 5.39
ANZ 5.39
SBS FirstHome Combo 3.29
AIA - Back My Build 3.34
SBS Construction lending for FHB 3.74
CFML 321 Loans 3.95
Co-operative Bank - Owner Occ 4.99
Co-operative Bank - Standard 4.99
Heartland Bank - Online 5.30
ICBC 5.39
Kiwibank - Offset 5.65
Kiwibank 5.65
ANZ 5.69

More Stories

Buyers sitting on the sidelines in best time to buy in a decade

Thursday, December 04th 2025

Buyers sitting on the sidelines in best time to buy in a decade

Stable house prices, low interest rates and plenty of houses to choose from are still not enticing buyers.

Differing views on 50-year mortgage

Tuesday, December 02nd 2025

Differing views on 50-year mortgage

US president Donald Trump recently raised the idea of 50 year mortgages; but New Zealand advisers say such long loans won’t take off in New Zealand.

Houses selling at a loss hit a 12 year high

Wednesday, November 26th 2025

Houses selling at a loss hit a 12 year high

About one in five Auckland residential properties (19.3%) sold for less than their original purchase price in the third quarter, up from up from 15.9% in the second quarter.

OCR Preview: How far is far enough for the RBNZ?

Friday, November 21st 2025

OCR Preview: How far is far enough for the RBNZ?

Economists expect the OCR to drop another 0.25% to 2.25% next week, with a 50/50 chance of another cut in February.