Everything conspires against affordable housing: the regulations, the cost of building and most of all the market. But all that can be fixed. AUT construction professor John Tookey explains how.

Housing in New Zealand is in trouble in so many ways. Quality, cost and sustainability all have roles in the discourse. But the critical issue, both locally and nationally, is the Auckland affordability crisis which is creating economic instability. How did we get here and where next? The culprits have all been paraded before the us – builders overcharging, lack of competition in materials, foreign investors, property speculators. Everything up to and including “A big boy did it and ran away”. So why this mess?

Technology

In 1965, Intel co-founder Gordon Moore noticed the number of transistors per square inch on integrated circuits doubled annually, while at the same time the price of each transistor kept going down. The eponymous “Moore’s Law” has become our benchmark expectation for product performance ever since. The phone or computer you use gets ever more capable, but the price doesn’t rise. Your smartphone has a high-quality camera, fast downloads, increased storage and route finding with GPS, but probably didn’t cost any more than the last one you owned.

By contrast, what has been happening in the building industry over the last 50 years? Not much. Houses are built as they were, using the same materials and trades, and taking the same amount of time. Construction productivity flatlines at $34/hr added value compared to a national average of $48/hr, with innovation 10% below the national average. Consequently building new is growing in expense, irrespective of economies of scale. We build approximately 7200 dwellings a year against demand of 14,000 a year for the next 30 years. The only way to meet housing needs would be to double labour productivity through innovation, or double our total workforce in housebuilding. Since we do not have a transient labour force of skilled workers as in Europe, productivity through technology is where we need to invest.

Housing types

‘Affordable’ houses are more expensive to build per square metre than larger properties. Typically, affordable homes are two or more storeys and attached rather than detached. The scaffolding and other technical requirements (some related to the Health and Safety Act 2016) lead to a cost of around $3400sqm. Conversely large single-storey houses are $2000sqm. The result? Affordable homes are affordable to the end purchaser, not the builder in the value chain. Why would a builder build lower-margin housing for the public good if not compelled to do so?

New homebuyers tend to specify the largest possible house on their section in order to incorporate the maximum residual value for themselves. Thus we see census trends in house building showing more four- to five-bedroom properties being built, while affordable two- to three-bed units are in decline (see graph below).

In short, the market is driving the wrong outputs at the wrong end of the market. Special Housing Areas (SHA) fail to change these trends, with stand-alone sections developed first and affordable housing developed last. Indeed, 56% of SHAs have been de-established.

Fragility

Our housing industry is literally a cottage industry: 98.5% are single person, ephemeral companies subsisting from invoice to invoice, using credit lines to stay liquid. Their risk profile requires spreading their effort over several projects simultaneously to maintain turnover. This industry corpus increases production scale without recruiting more tradies and increasing their risk. Hence costs climb with demand. They are inefficiently organised with poor bargaining power compared to group builders. Most therefore fear the boom-bust cycle. Altruism for homebuyers is not among their priorities. Builders take only the work they can manage to limit exposure to the ‘bust’ cycle, thinking in terms of three to five years until the downturn – but indicators that it might be on its way are already appearing.

Land

Land supply is core to unaffordability, but it is fundamentally wrong to assume that more land being released and consented more cheaply and rapidly equals more housing more quickly. This is only true if industry capacity is scalable to demand and the market operates perfectly. ‘Material availability’ doesn’t automatically deliver higher production rates. Land improvement/preparation capacity is as constrained as housebuilding. Doubling available land will not double the number of land developers or their capacity. Imagine a car producer received an additional million tonnes of sheet steel at their factory at zero cost. Would more cars be produced? No. A more likely scenario is optimised production to factory capacity, retaining the current selling price, margin and brand value.

The problem is exacerbated because before land is ready for house building, costly infrastructure, drainage and improvement is required. Consequently it is a tough, cash-intensive industry to enter. Once again we expect industry to absorb the cost and risk of delivering societal needs when increasing production forces down sale prices for all producers. Is it reasonable to expect markets to deliver societal needs then be shocked when they function in their own interests?

The future

Einstein said: “We will not solve the problem by using the same reasoning that created the problem.” By contrast, current government thinking on land availability is the equivalent of Captain Blackadder anticipating the plan for the next offensive: “It’s the same plan as last time and the 17 times before that.” Blackadder economics from government will not cut it this time. Land release and Special Housing Areas are not solving affordability issues since social outcomes are not compelled through ‘use it or lose it’ clauses, or incentivised through additional profit. Compulsion (or profit motivation) in land development is required if we take affordability seriously.

We need incentives to use prefabrication to increase productivity. Why not specifically fast-track consenting for prefabricated housing? Why not make consents zero cost for two- to three-bedroom housing and double or triple current rates for four- to five-bed housing? If this is a national crisis, why not create a national prefabrication plant producing inexpensive kit-set housing with pre-approved building consent for generic designs?

How about incentivising landlords to sell off their buy-to-let investment properties? Imagine a scheme where landlords agree to divest their portfolio so they can place their capital gain tax-free into KiwiSaver – provided they commit to not directly or indirectly owning investment property in the future. Imagine genuine state housing (not mortgage assistance schemes) delivering the two-to three-bedroom housing we need, rather than expecting industry to deliver this category of homes with lower profits and higher risk?

Ultimately government must accept the seriousness of affordability. Blackadder economics and wishful thinking will not magically change what is and is not profitable for the housing industry to build. We are at a tipping point for the New Zealand economy. The electorate know it. The question for government is whether laissez-faire ideology or pragmatic intervention will win the debate.

Either way, decisive action is required now.

This article is taken from the Public Service Association – a union for public servants – book Progressive Thinking: Ten Perspectives on Housing, in which contributors consider everything from land and building costs, to the inter-generational effects of the tax system on New Zealand’s housing markets; from renters’ rights and the housing needs of people with disabilities, to the role of the state and local government in solving the problem. You can download the book for free at www.psa.org.nz/housingbooklet or buy a hard copy at Unity Books in Auckland and Wellington.

The Society section is sponsored by AUT. As a contemporary university we’re focused on providing exceptional learning experiences, developing impactful research and forging strong industry partnerships. Start your university journey with us today.

When you’re experiencing mental health issues, finding someone to talk to about it is key. Graham Panther tells the story of his own journey through the mental health system – and why he’s started a uniquely welcoming, no-questions-asked support group, The Big Feels Club.

Not long after my 23rd birthday, my life fell apart  –  for no particular reason.

I woke up one morning like any other, and I didn’t exist anymore. The world was there, but I wasn’t. As my eyes adjusted to the morning light of my girlfriend’s bedroom, I had a strong sensation that something at the centre of my being had disappeared, that everything had changed in some Very Important Way. I couldn’t shake this feeling for weeks. The abstract nature of the problem only made it more urgent, and totally bewildering.

Imagine trying to explain this to your friends and family  – particularly when, thanks to a cultural heritage of Kiwi understatement, you present as completely fine and normal.

Me: “Mum, the thing is, I’m pretty sure I don’t exist anymore.”

Mum: “You might just be hungry? I’ll make you some lunch.”

Helpfully, there were other symptoms that drew a little more attention. The episodic breaks from reality, in particular. Moments when time and space would cease to exist, sometimes for hours on end. And waves of immense terror.

As the months ticked on, there were many things I couldn’t do the way I used to. Each day one more thing was now outside my rapidly shrinking comfort zone. Going to the supermarket. Driving above 80kph. Driving anywhere at all. These all filled me with anxiety, not to mention worry about what would happen if I had another episode while doing them. And worst of all, I had no idea why any of this was happening in the first place.

This was ten years ago. It was the most profound, life-changing period of my life, and also turned out to be first-hand research for my future career. I now work in mental health, trying to help others make sense of their big, bewildering experiences. For the past six years, I’ve consulted to government on policy and system design in NZ and Australia, drawing on my own messy life experiences the whole way through.

It’s challenging work – with its share of wins and frustrations – but I recently had an uncomfortable realisation. Of all the great services I’ve been lucky enough to help build, I myself wouldn’t go to a single one if I needed help again.

Holy shit. Why is that?

It’s because even in the most welcoming, friendly services there’s still an unspoken cost to getting help. I’m not talking about money. I’m talking about the cost to your sense of self.

Here’s the thing, we still make people feel like shit for feeling like shit. And that’s not just stigma, it’s the whole way that we think about this stuff as a society. It’s all about what’s wrong with people.

I’ve picked up a few diagnoses in my time, and tried a lot of treatments. Some helped, some made things a lot worse. The mental health system didn’t just ask me to swallow a pill. It asked me to swallow a whole way of seeing myself: as a problem to be fixed.

The language of mental health is all about deficits, disorder. Getting anywhere in the system means taking on that language. But taking on that language can make it hard to hear yourself think, or to see yourself as more than a set of symptoms. And all that can leave you feeling really, really stuck.

As an example of how this plays out, walk in the door of almost any service; before you can access any real help, you have to answer a confronting question: “What’s wrong with you?” What this means in practice is usually an assessment, often an onerous process to prove your eligibility. One service user memorably described this to me as “opening the Pandora’s Box of all the things that have gone wrong in your life” – then having to do it all again with each new service you try to access. Not all services do this, but for the most part any service is only available to people who have first gone through that mainstream process and gotten a diagnosis – either because you need a referral, or because there’s literally no other way you could find out about the other service options.

To be fair, I’m meeting more and more mental health workers who question the importance of diagnosis, who approach those initial assessments with a great degree of nuance. But this doesn’t change the fundamental emphasis on deficits. There’s a lot of compassion in this system, and a will to do better. It’s just so hard to change things.

Mental health workers have a tough gig after all. You go to them at your absolute worst, desperate for something they almost definitely can’t give you: answers. Answers to the biggest questions our little minds can dream up. What do these experiences mean? And why are they happening to me?

So what did help me climb out of that great, big hole I found myself in at 23? What changed my life wasn’t getting a diagnosis, or finding any answers really. It was finding other people asking the very same questions. It was finding my tribe.

When I was freaking out about having fried my brain – when my psychiatrist casually suggested I had “brain damage, probably irreversible” – I had no idea there were other people out there with similar experiences. I certainly had no idea you could go through these things and come out stronger.

About a year after that first breakdown, after tearing my hair out and contemplating my own death more than once, I started working as a peer support worker, at a mental health agency staffed and owned exclusively by people with their own experiences of crisis and distress. It was the single most nourishing place to have an ongoing nervous breakdown – surrounded by others who simply got it, people who weren’t fixed but weren’t fucked either. To this day, fellow travellers remain my main lifeline when things get hard again.

In the past decade, peer support services (where the staff are people who are employed because they have used services) have steadily grown in NZ and around the world. They’re now an established part of the workforce, with an emerging evidence base showing they’re cheaper and at least as effective as mainstream mental health support. Yet this life-changing resource remains largely hidden, gate-kept. In most instances, you can access peer support only once you’ve first tried all the more expensive offerings – the psychiatrist, the nurse. Only once you’ve been thoroughly introduced to that idea that there’s something wrong with you.

New Zealand actually has some interesting experiments looking to change this – for instance, programmes in select areas where you can access peer support via your GP. In South Auckland, in the alcohol and drug sector (pioneers of peer support via Alcoholics Anonymous), you can access peer support directly without going through any other services. But these remain the exceptions to the norm.

What many people don’t realise is there isn’t just one way of talking about crisis and distress. There’s certainly one dominant way: the diagnostic model, in which doctor knows best. But there are a hundred other ways of making sense of bewildering, distressing experiences. Existential therapy, Intentional Peer Support, humanistic psychology, you name it. Many of them are much more optimistic about the value of human distress as part of a good life. I didn’t know about any of these for years, and I didn’t learn about them from the mental health system, I learned about them from other people going through it.

That’s why I want to make it much easier for people to find their tribe. I want people to have access to more ways of thinking about their big, uncomfortable feelings, so they can find what works for them. I want to create a resource that I’d actually want to use!

So, drum roll, here’s what we’ve been working on. Entering the world on shaky little legs, with a few little bets on the go: The Big Feels Club.

This is only one part of a complicated puzzle, but we’re excited about where it could go. Right now it’s mostly online – in your inbox, in fact. If you sign up for our newsletter at the link below, you’ll get a fortnightly dose of new ways to think about about feelings, crisis and distress.

We’re planning real life events across NZ and Australia from early next year. Some will be in pubs and libraries, some will be in people’s living rooms. They’ll be places you can meet fellow travellers, and dive into the existential goo together.

Our big aim is to contribute to a society in which crisis and distress are seen as opportunities for connection and growth. Where you don’t have to ask for help, because exploring your messy, scary feelings isn’t seen as something people only do when they’re desperate.

There’s no eligibility criteria, you just have to want to join. If any of this sounds like you, and you want to stay in the loop, sign up here.

Graham Panther consults to government and not-for-profits on mental health service design, in New Zealand and Australia. He is co-founder of the Big Feels Club. Find him on Twitter here.  

The Society section is sponsored by AUT. As a contemporary university we’re focused on providing exceptional learning experiences, developing impactful research and forging strong industry partnerships. Start your university journey with us today.