By Jason Walls
Housing Minister Phil Twyford wants a “significant” number of KiwiBuild houses to be prefabricated and is welcoming the help of overseas companies in this area.
But he is reluctant to speculate on how many houses constitutes “significant” and to what extent the Government will be enlisting the help of foreign companies.
Last week, Twyford told Prefab NZ’s Auckland conference that the Government’s 100,000 KiwiBuild homes goal was not possible without the use of prefabricated homes – houses that are built in factories and then assembled on site.
Speaking to Interest.co.nz, Twyford says New Zealand’s prefab industry is still in the “early stages of development.”
“It may well involve overseas companies coming in because there are so many countries around the world who have a more developed market and industries in this space.”
The Europeans, for example, have been leading the way in prefabricated building in recent years, he says.
Twyford says as well as enlisting foreign companies to get the job done, the Government wants to grow the New Zealand market.
“We want to create jobs for New Zealanders in this industry – so really transforming the New Zealand industry is a big part of our agenda.”
There are a number of prefab companies already operating in New Zealand which he says are ready to step up, for example, EasyBuild based in Masterton and Fletcher Building.
He adds that there are construction companies which are very keen to be part of this, “some of the larger group home builders that I have been meeting with are very keen.
“I imagine that you would see a consortium of some of the smaller firms coming together to bid for work as well.”
The Government is in the process of putting the “finishing touches” on KiwiBuild’s procurement plan and, as such, Twyford cannot speculate on the split between New Zealand providers of prefab houses and overseas companies.
A recent report by PrefabNZ says prefabricated factory-built houses and apartments could deliver up to 7000 homes a year, or 70% of the Government’s yearly KiwiBuild target.
But Twyford is unwilling to put a number on how many KiwiBuild houses will be prefabricated – only saying “it would be significant.”
The home loan problem
In the past, concerns have been raised about the complicated processes around getting a home loan for a prefab house.
New Zealand Bankers’ Association chief executive Karen Scott-Howman says as banks require home loans to be secured against an asset, would-be prefab homeowners are on the backfoot.
When the prefab property itself is being used as the security, banks will generally only lend up to the value of that security as it's being built.
“The issue is that you can’t create a security interest in something you don’t own,” Scott-Howman says.
In these cases, it’s difficult for banks to lend without security, or lend an amount greater than the value of the security.
There are ways around this, but the complexities can drive people away from going down the prefabricated housing route.
Twyford says the last thing the Government wants is for there to be a roadblock for people trying to set up a prefab home.
But he does not see the need for any new regulations to make the process easier.
“This is something that we will be working with the banks and the offsite manufacturing construction companies on to see if we can find a way through this.”
He says one such way is if the customer already owns the land the house will be built on, that land can be used as security before the prefab house is constructed.
Another option would be for the prefab companies to allow for progressive payments to be made on completion of certain building milestones.
“I know it has been something that has been a bit of a problem, but I’m hopeful, based on the advice we have had, that we can work through it so it’s not an impediment.”
109 Comments
They don't call him " the Tool Man " for nothing ... Phil gets the job done , buddy .... the question is , how do you feel about living in a bamboo pre-fab hut .... the roof is corrugated iron , the real deal , steel !
.... do you need running water with that ? .... running water might take it out of the " affordable " bracket .... as would a floor .... and windows ... power ... ceilings ...
And Twyfords cunning plan will see ghettos popping up all over the place.
How about he actually does some work and find out why Australia can build houses at $400k just outside of Melbourne, yet we cant do that in Auckland for twice this?
New Zealand has been exporting its dairy industry knowledge for years. Maybe something similar in reverse order now with "European prefabbers" could ensue. New skills for nz building industry workers as a result. God knows nz building standards have taken a battering with leaky homes era.
That's the only way I can see this working. North American knowledge could also work.
Kiwibuild should not be seen as purely as a way to boost employment. It's simply impossible to build this many houses without automation and cookie cutter designs.
The way we build houses is crazy. Because covenants rule out modern building methods every house has to have it's own design, consent, and is built on site in rain and wind. We can't easily use imported materials because NZ has "unique conditions" which is just an excuse for councils, BRANZ, Fletchers et al to fatten their pockets. Case in point aluminium window frames, made of the same material used in frying pans and electrical cables.
If we're going to have the huge overhead of local standards they should at least be good. The average new house is drafty, thinly insulated, poorly ventilated, not centrally heated and has thermal bridging everywhere.
I'd like to see outcome based tests like air tightness testing so dwellings can be marketed based on real performance just like buying a heat pump or a car.
" We can't easily use imported materials because NZ has "unique conditions" which is just an excuse for councils, BRANZ, Fletchers et al to fatten their pockets"
Exactly right, I can't help but chuckle every time someone mentions those unique conditions.
NZ has neither the cold of Chicago, nevermind Alaska, nor does it have the heat of the Southwest or the humidity of Houston or the hurricane threat of South Florida... 'Unique conditions" is pure marketing speak.
or german knowledge, they have some of the best prefab people in the business
https://www.huf-haus.com/uk/the-company/
http://www.baufritz.com/en/homes/
https://www.weberhaus.co.uk/
So were flat roofs. Monolithic cladding is fine in California where it doesn't rain. That doesn't rule out learning from other countries' building methods. There are plenty of places with more severe weather. The NZ conditions story is bollocks made up by the building industry.
Today it costs about $2000 a square meter to build. If it wasn't for all the red tape it would be half that price.
Tim Deposit
Correct the Europeans can build a 3000sqft house in the coldest part of Scotland that will cost only NZ$35 a month to heat . The standard of kit set & prefabricated energy efficient house builders in the UK is extremely high and low cost high quality better designs.
I wanted one myself but ended up buying a regular salt box style 3 level home which is superior but not equal to euro energy efficiency.
NZ can build Lockwood type homes which will withstand a 9 earthquake so why not include this earthquake resistance in any new construction Minister.
What the CoI fail to understand is that those workers wouldn't necessarily be permanent, and those skills are required, we have a shortage of skilled tradesmen. With a building boom, which is what this would involve, what the CoI also fail to factor in is the potential for returning Kiwis, skilled tradies who are in AU to come home.
The building industry in NZ is a very troubled industry from the ground up. The last 20 to 30 years of regulatory interference has finally caught up and silly people in Wellington and Councils across the country ddon't understand their role in making it a troubled industry. If I was a tradie in Australia I'd stay there.....the grass is not greener in NZ despite a housing shortage.
Balancing act, eh.
The building industry didn't exactly demonstrate it could be trusted without regulation. The problem is we've also had to socialise the cost of their failures - as is usual in pretendy-capitalism - rather than having them accountable for their failures.
Absolutely I agree, to my mind, and in essence the reason why people pay me is I'm a problem solver, you either say that's a problem and we'll deal within the parameters of the problem, or you say why is that a problem? What can be done to make that not a problem? Is that a irreconcilable thing, or are there ways around that problem, generally there are ways around a problem, sure they need work, they need thought, but I'm yet to find a problem (in business, I'll leave theoretical physics and the like to people who are smarter than me) that isn't solvable. Move the obstacles out of the way and generally there's a solution - if Fletchers are the problem, move them out of the way, if Land values are the problem, why are the problem? What can be done to remedy that situation? Key questions for any business, in any market - Why, What and How?
The foreign involvement is a challenge - albeit part of the solution in the past.
What is important is a transformation of the building industry. I think NZ has lost the art of building cheaply - and the rocketing prices in Auckland meant that no body cared. I know I have a site that I have resource consent for townhouses for, but can't build them for less than I could sell them despite the rocketing Wellington prices.
The big % in cost is the price of land and its the one that is "easily" solvable. However politically its un-swallow-able ie buy up land at rural/CV price en-mass (ie a ring 10km wide around Auckland) and then re-zone it and parcel it at the rural price, but that would cause mayhem.
After that the infrastructure costs are huge, but no one has shown yet that these are un-justified. I suspect they are reasonable, this means somehow they have to be financed. So if upfront is un-affordable then an extra rates? but in effect its still an outgoing on someone's pay packet either way and $100k on the mortgage costs at 6% is almost certainly cheaper than 8%+ via a MUD. Indeed I have yet to see someone show doing a MUD actually makes sense, unless there is some truth that the Council's around the country are charging a huge excess, so can anyone prove these please?
So if we cant solve the supply that leaves the demand side and removing foreign ownership and reducing immigration would help. However then you could collapse the property bubble and FHBers and others would lose their shirts and that is also a vote loser.
Really it comes back to this should have been delt with in the past, ie in HC's term(s) of office IMHO as now its out of control.
Steven unless the building materials cartel is broken by allowing more competition most of the land price savings would be soaked up in building costs. Likewise if building was cheaper people would spend more on land.
Of course if sections didn't have "minimum 200m2" covenants the building demand would be a lot more elastic.
Hmm yes that is an interesting point, materials do seem to be more expensive here. The Q is that should be reflected in huge profits, is it? doesnt seem that huge so maybe its not such a big thing.
A 200m2 plot? or 200m3 house? As a plot 200 isnt exactly big by any standard. Funny thing but I am for ever hearing ppl say they like space, 200m3 doesnt deliver IMHO. If its for the house then that is a private covenant I would assume.
Hi Steven, many times I explained on Interest.co,.nz how MUDs work, having used them in Texas. They do work.
And they could just as easily work in NZ, if legislated for.
But what is going to happen is between all the vested interests, they will just take what bits of the MUD rules suit them, which means it won't be a true MUD and therefore won't work.
Not that they will care, because there is plenty of money to be made by those vested interests before everyone else wises up.
Nothing wrong with a good quality prefab, in fact a good one could well be better than a local bob the bodger's building effort.
Oh and maybe you have not noticed how much of the frame is made off site? Like just about all of it so "prefab" much of it seems to be.
The purpose of KiwiBuild is two fold:
1. create jobs for Kiwis because building/construction is very lucrative and employment size is big
2. solve housing shortage so that ppl can live their own affordable houses
Very good purposes. But if the minister can put down his ego and ignorance and talk to experts, he will find out there are massive capability/financial/policy gaps between the resources to achieve those purposes and actually achieving those purposes.
@xingmowang.......... create jobs ?
We actually have more than enough jobs for everyone who actually wants to work .
We have over 95% employment
The 5% "unemployed " are regrettably unemployable or simply will not work .
The building industry is crying out for even unskilled labourers ............ and cant find suitable staff
What about 3D printing? It's possible to print a house, it's an industry that is in growth mode, up skill some 3D printers, create a value add industry, as opposed to primary.
There's a company in Colombia that are making houses out of waste plastic, I think that's brilliant - recycle the plastic, it's durable, weatherproof, and helps clear up the environment. https://www.forbes.com/sites/lauriewinkless/2016/07/21/these-houses-are…
Sounds like these prefabricated homes will be luxurious and can hardly wait to see them dropped,onto sites in Auckland in the back blocks!
How much are these hardy plank boxes made of ticky tacky going to be? $600 k plus 2 hours to Travel to get into Auckland.
Geez sounds like an ideal lifestyle you have Christchurchites ever so jealous Phil!
Will be very interesting to see how this pans out and if it does get off the ground, how many will want these prefab boxes as there will be next to no capital gain on them if there are going to be so many of them!
Good on them for finally announcing something but really once again no detail of any note!
How much and where are they going to drop them and will Banks be that keen to lend on hardiplank boxes?
Maybe they'll put some of these nice new warm draft-free houses on the back blocks of Christchurch with a 20 minute commute for $350k. Will the FHB still want to rent a damp rat box in such a market?
'Tis the season in Christchurch. The decorations are up everywhere. For lease navidad.
Bilbo, impossible to put these hardiplank crap buildings in new subdivisions in Chch as there are stringent covenants to protect others assets.
We also don’t need these basic boxes in Chch as we do have higher standards than that!
There are also enough nice houses around in Chch and so we don’t require low standard boxes here.
As for draft free, I can tell you that most of our houses are not drafty and ours are all very well insulated.
The ones that would like one of these box’s will not be able to afford them as they have no deposit plus can’t service the loan and the ones that can afford them won’t want them!
Exactly, there would be no demand for them in Chch
We have far better taste than needing to live those type of boxes.
Fletchers have built some ugly 2 storey boxes so called terraced housing and want $500k for them!
Very little demand for them as people dont want that sort of living being able to touch your neighbour!
If that is what Auckland housing future is, then Good luck!
YOU CANNOT BRING FLAT PACK PREFABS FROM GERMANY OR POLAND INTO NEW ZEALAND !
I went online to investigate and found an amazing flatpack little 3 bed home built in POLAND and acceptable for construction in both Britain and Ireland and northern Europe .
At 90m2 it would cost less than a flatpack the size erected by a firm in Huntly
BUT IT CANNOT BE BROUGHT TO AND ERECTED IN NZ
I suspect that Fletchers who dominate and virtually control our building supply chain has a hand in this
It defies logic ........... Northern Europe is both colder and wetter that NZ so the argument that it does not meet our building codes is just a cop-out
For a single story house made out of light weight materials strength simply doesn't matter that much. We build new houses out of crap here anyway. Sticks of weak low density pinus radiata.
A modular house is great. They are cheap, so if there there is an earthquake just replace it.
... but but but ... if we allow people to import cheaper and better building products from overseas Feltchers will have to work harder to compete .. ... they'll lose market share .... and profits .... oh , yeah .. profits are a thing of the distant past ...
Poor sweet little Fletchers ... we must protect them at all costs ...
Local building industry hasn't a leg to stand on when it comes to claiming any level of quality. We're a bunch of suckers, paying premium prices for sub-kitset level wonky cardboard dreck.
How about all those new builds in Tauranga where damage from Cylone Gita revealed that they were practically held together with sellotape, but had somehow managed to pass inspection despite numerous missing vital construction components.
http://www.clearpools.nz/modular-homes - what he lists is just the start. These come in wired, plumbed. Connect to services and you are flying.
And I have another friend investigating similar larger products ex .... shhhhh ... China. Eventually the government will have to break up the fletcher carter hardies monopolies. Branz needs to be binned.
You always need QA on site during manufacturing. I've instructed holes to be cut in Chinese manufactured out buildings to see if the insulation met the specification. It did, but you expect that if manufacturing is supervised.
So long as the cost allows enough for any defects I don't see the issue.
The opportunity for cheating is so rife with all those pre-installed systems, what happens three years later when you find out about all the things that weren't easily observed ahead of time. You'll test every batch of coatings so that it meets anti-mould resistance? Every batch of plumbing for corrosion resistance and no lead? Every fastener for specified tensile strength? How much money will you save when the task of policing the people trying to screw you is so onerous? I'd rather deal with reputable companies from countries with credible standards and rule of law. Caveat emptor.
Apple has issues with their manufacturers (and should be doing more to police them) but generally their products are of a sufficient high quality. The product cost is extremely low so even with high policing costs you still save a lot.
As we're in a global market competitive prices should be available from every country willing to supply the market so I don't see such an issue. The real question is what will the Government decide to do? Will they pull a National Party special and turn Kiwibuild into another Christchurch rebuild?
Yeah I don't like that approach one bit.
This discussion reminded me of something I read recently, it's kind of funny.
http://goodbeerhunting.com/blog/2017/8/2/a-stainless-steal-how-do-you-s…
I am okay with a chance of getting a faulty iPhone because it only costs me around 1500$. But a house will cost way more and I could get sick or die in it if not made to standards. Hence I would rather pay a premium to people who values honesty and rule of law over scumbags any day.
Yes lets no kid ourselves that all of our existing houses are great because even most of the new builds are complete rubbish.Lets be honest here I have looked very closely at the build quality of my own house over the years and it wouldn't be hard to build a prefab considerably better. Honestly the houses here are made of matchwood and held together with a few nails. The "one off" nature of the build results in a massive increase in labour costs and a decrease in quality due to mistakes that you eliminate by building the same thing over and over and perfecting it.
We all know what prefabricated buildings look like a few years down the track......... awful blots on our environment.
KiwiBuild is about converting parts of our towns and cities into urban slums.
Clearly, KiwiBuild was an ill-conceived election bribe that has got out of hand. It is now being diluted down into something that is unpalatable.
Thanks - but NZ can do without this sort of rubbish.
TTP
DGZ, TTP, when presented with a bulk prefab solution to the affordable housing shortage, it amazes me that some are so short sighted, they complain. National Party built less than 100 houses in nine years - that's hardly smart. Twyford offers a credible solution. What has Collins can come up with? (I hear crickets)
http://www.newshub.co.nz/home/politics/2018/03/no-one-cares-about-natio…
What about all those decaying monolithic leaky structures that surround you both? Do you class those as rubbish junkies? Maybe you're even trapped in a mouldy one - together!.
For once show some compassion and focus on those that need to be affordably housed. If this isn't sorted there maybe no steering around a future with frequent incidences of social unrest and no-one wants that!
Your comments smack of greed and snobbery and will surely make unwelcome reading to those trying to get ahead.
Trying to compare rubbish prefab junkies with Huge Glamour in Double Grammar? LOL!!
https://www.trademe.co.nz/property/residential-property-for-sale/auctio…
Heres the type of building prefabs could look to replicate.
You have no idea, its what happens when you need to build affordable housing. Happens all over the world in the largest countries and the largest cities.
Those houses are in London, have you ever been overseas to a large city.
All you care about DGZ is yourself. While I think that is great as you should care about yourself and keep yourself to yourself. There are other people in this world that are struggling to get a roof over their heads and house to call their own. Come up with a solution and I will be happy to listen, instead of patting yourself on the back. I like people like you DGZ it shows me how great my life is not knowing people like you and having the friends and family I have. Happy St Paddys day, I will be in London in an Irish Bar enjoying myself, hopefully watching Ireland beat England. If that doesnt happen just enjoying a few drinks with my friends.
DGZ, I get the sense that you will also look down on the people that live in prefabs. To criticizing prefabs simply on appearance, is not cool.
Zachary, show some restraint. I sense your looking at them as an efficient opportunity to collect rent. If true, it smacks of pure greed and would defeat the main purpose to which they were intended - increased home ownership.
Like yourself DGZ, the National Party are so dangerously out of touch with the population. They offered post election tax cuts believing it would get them reallected! Again, not smart! The voting public cared more for humanity than their own pockets, voted for action and change and they got it.
“If you look down on people, eventually you will be nothing but an ant to those people that you looked down upon.”― Anthony T.Hincks
you're thinking prefab mass produced post war. Even those are better than a custom stick build made today. The prefabs of today are quality due to manufacturing tech and processes being applied vs a she'll be right onsite method. Prefab is good if the volume is there, time for gubment to put $$ where mouth is.
Still lots of talk but what I want to see is how brutal this project becomes.
Most of the prefabs I've looked at all boil down to their proprietary connections that are just there for copyright purposes. It's all stuff that could be manufactured here but who wants to trust working with the Government? Most in the building industry have had bad experiences with the Government, they've long since burnt their goodwill.
These issues with pre fab were well understood long before the coalition announced 10,000pa additional new builds. So no surprises then. Twyford now acknowledges he knew conventional construction pipelines would deliver only a limited number of Kiwibuilds. So, he had identified back then that prefab was going to supply 70%+ under the coalitions grand plan.
Which must mean he had secured firm expansion commitments from pre fabricators before the election (one hopes not from Fletchers B&I division). After all, Phil would not speculatively 'pull housing numbers out of his arse' (as accused by infometrics ) when promising the nation 10,000 pa new builds, additional to what the existing pipeline would have delivered.
So Jason - how about some more detail on the commitments Phil received from the prefabricators that underpinned the Kiwibuild plans delivered by Labour as part of its election campaign? Were they real documented commitments, 'hopes based on advice', a general show of hands of prefabricators 'interested' in expanding production, or perhaps Shane Jones had long ago developed a documented plan for a pork barrel prefabrication factory in deepest Northland?
Speaking of the Jones Boy -
https://www.radionz.co.nz/news/national/352689/7m-infrastructure-upgrad…
The Boy done good.
Phil T, commercial and conceptual genius; solving the housing crisis in one foul swoop: "The houses, we will prefabricate them."
The capitalists are swooning over this man's innovation, and distraught at their own lack of foresight to get pig rich with this idea...
It's one thing to build cheap houses but quite another to provide the serviced sites for them to be built on! That's something which will take 2-3 years to make happen. And then in the Auckland market at least, have cost of no less than $500,000 for even say, 250m2. That doesn't leave much for the cost of the house, site improvements, etc when you are aiming for the 'affordable' price limit. So, the whole things is stuffed from the start!
So true, 360 to 450 sqm sections on the North Shore still selling for $600-$700K before you even start with the cost of the house and all the council fees so its not going to help here. Sorry but its a case of building satellite cities on the fringes that have excellent public transport and people will have to put up with long travel times to the CBD if they have too. Of course there is a risk of them becoming slums, but that is ultimately up to the people living there to stop that from happening.
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