Recently, a mid-sized property developer in Sydney informed me that the average build cost in Sydney was $1500 a square metre. In Queenstown, the average build cost is currently $3000 a square metre.
With our average wage being much less than Sydney’s (not to mention Sydney’s lower food costs) we will always find home ownership challenging.
The housing trust calls $485,000 an affordable house.
With average wages here $45k, that gives us a home at 10.7 times our average wage. The Wellington ‘experts’ tell us that affordable housing is six times the average wage. So unless Queenstown comes up with the $270,000 home, then our town remains unaffordable by all measures, and will continue to be so.
It’s not just Queenstown that’s unaffordable either.
Despite cheaper build costs across the Tasman, it is the land prices that have escalated, just as they have done here. An Australian economic report concludes that 70 per cent of house prices in Sydney and Melbourne were made up of the value of residential land. In Los Angeles regulations inhibit affordable housing, just as they do here. The same happens in the UK. Unaffordable housing, it seems, is a global western ‘disease’.
Far too many regulations, a tax system that favours property ownership; low mortgage rates; continued high immigration numbers despite Labour having promised a reduction; a shortage of builders; expensive building materials and higher taxation. All of these make for unaffordable housing.
Tourism New Zealand boss Stephen England Hall is quoted in the Otago Daily Times saying: “The key beneficiary of tourism is generally central government, and the key cost bearer of providing facilities for tourism tends to be local government ..”
Central government doesn’t want to bear the costs of earning those tourism tax dollars, so they dump it back on local government. Our increased rates (essentially a tax increase) can be sheeted home to the need to pay for those tourism revenue dollars.
Our infrastructure is poor, due to a lack of central government investment. They love the money, but they don’t want to stump up the costs of generating that cash, so it’s our community that continues to bear the cost.
Wellington thinks we’re a rich community with average house prices of more than a million dollars. A quick examination of our prices shows that the land upon which the house sits is typically three times the cost of the average house build. Thus, stand-alone houses, over time, will likely morph into lower-priced apartment living. The trade-off for the almighty tourist dollar is a lower standard of living and a diminished quality of life for those who live here.
‘Creating jobs’ should not be about modern slave labour – pay them enough, they will come. If you cannot afford to pay more, then maybe you have an unviable business model.
Most of us are already stressing with higher prices, unaffordable living spaces, longer working hours, traffic congestion, noise and so on. Our obsession with tourism growth is an economic mirage. We talk of limiting this growth but do not know how.
The city of Venice has even more visitors per head of population than we do, and there are calls there for tourist numbers to be reduced. Venetians want their town back.
To Queenstown councillors: When is enough tourists enough? What are you going to do to bring our quality of life back to where it once was? Without adequate infrastructure in place, the current growth is unsustainable.
Mike Ramsay is a keen observer of the Wakatipu