Why Are Mobile Homes needed?

25 years ago, homes were affordable.

Today, they Are NOT.

This section is educational. It explains why the market for mobile homes has emerged over the past two decades. It is intended to be read by elected and appointed officials in central and local government, by media reporters and by other pundits who need to work out why NZ faces an affordable housing crisis, and what can be done about it.

  • In 1960 it took 10 years to buy a home
  • In 2000 it took 25 years to buy a home
  • In 2020 it takes 50 years to buy a home

If you take the median income and the median house price, and 33% of household income went to pay for a home, the median family could pay it off in 10 years in 1960. That rose to 25 years by 2000. Today it stands at 50 years. What happened?

It’s the perfect storm created almost exclusively by managerialism: the accretion of costs attached to subdivision of land, securing permission to build and the cost of building materials and labour.

Pecuniary Interest Masking as Public Interest

NZ lacks an effective system of checks and balances. As a result, pecuniary interest is able to be presented as public interest, with policy and regulation following. In the end, the cost of every law, every rule, is either paid for by the general public, or in the case of housing, by the person who buys or rents the home. This is the cause of unaffordable housing in NZ.

Land Costs

The RMA is supposed to enable people and communities to provide for their economic wellbeing, but it resulted in district plans that do not align population growth with developable land, thus land became an investment commodity.

Then, district plan rules began to be written in a complicated language inaccessible to ordinary people who found they needed to hire planning consultants at $300/hour. In many cases the consulting planners were formerly the planners who wrote the district plan.

Next, the councils began to require specialist reports on every detail. Reports that cost $300/hour to write and the council charged the applicant $160/hour to read. In the end, council says most plans get approved, but fails to see that all such charges are added to the cost of the land.

And it gets worse. Under the principle of user pays, planning departments have a monopoly where they charge not only fees, but levies, contributions and significant fines that are used to fund their salaries.



Building Costs

Once permission is granted to build, the paper costs are not over. The council Building Control Authority (BCA) must give consent to build. Whereas 20 years ago this was a simple process – submit basic plans, show compliance and pay typically a few hundred dollars to cover reading the plans and several inspections, with the introduction of the Building Act 2004, everything changed.

The Act was adopted reactively. Mainstream establishment building material companies had promoted new products – most notably dried sapwood timber that rotted when exposed to a moisture content of 27%. Leaky home crisis was a master-class in deflection. The dominant players blamed cowboys when in fact they had lobbied for more self-regulation to promote what proved to be substandard cladding that did away with of rain protective design. The businesses guilty of substandard construction were liquidated, their owners protected by limited liability, leaving councils exposed under joint and several liability. In other words, it was a failure of ministry managers who drafted the 1991 Act and 1992 Code that ultimately passed liability on to ratepayers.

In response to the rotting home crisis, the government passed the Building Act 2004 that is welfare for architects, engineers and other consulting experts. It created a new class of licensed building practitioners that saw hourly rates triple and quadruple. Every detail has to be set out, adding tens of thousands of dollars to building consent applications, and delays that can take months, even years to get approval.

It gets worse. The trade associations were invited by MBIE to sit on the committees that write the regulations. Naturally, they represent the pecuniary interest of their members. Arguing that NZ conditions are unique, in a nation the size and population of the US state of Colorado, any overseas or startup innovation must face a huge proof-of-compliance cost before the first product is sold. This created Fortress New Zealand where competition is suppressed.

These problems are too large for the industry to change. The industry emerged because mobile homes are not structures under the RMA and not buildings under the Building Act. Thus, its costs are the same as homes used to be: actual materials, actual labour, cost of a factory and a reasonable margin.

It is essential is to ensure mobile homes do not become entangled in the regulatory monopoly that adds cost with no true benefit.  The products are well designed and made in factories at a rate of ten a month. If its not broken, don’t try to fix it applies to our industry. It works.