| 29 Classic Group Karen Phelps Changes to RMA seen as essential The Kaimai Views development at Omokoroa, a joint venture with Western Bay of Plenty District Council. REGIONAL DEVELOPMENT The devil is in the detail regarding the proposed changes to the RMA, says founder and director of Classic Group, Peter Cooney. “The current RMA is really hard work, and the processes are too cumbersome. Our Tauriko West development is a good example - six years in and we still haven’t had the land rezoned. “The process is diabolical. There is so much uncertainty, particularly around timings, and that’s the real issue with the current RMA process - we didn’t know how long it would take to get a consent or whether we’d even get it in the first place.” Even if RMA changes do go ahead, he is still doubtful it will make a meaningful impact on house prices for future homeowners. There are two factors to consider – the cost to build the house and the land it sits upon. “Hopefully what the government is proposing will streamline things and make it easier and faster to rezone land. If this happens, there should be some positive effect on the cost of housing but how much will depend on how the land purchase was structured. “Build costs have gone up hugely in terms of supply, labour, and inflationary pressures, and I doubt we will see a huge reduction here. Personally, I don’t feel we will see a significant drop in the house pricing.” As an example, in 1996 Peter says he could build a brand new 150sqm home for around $90k. That figure is now $450,000, which he terms “unrealistic and unreasonable” for a place like New Zealand. “We are such a little nation and the industry is hamstrung by a small number of suppliers. For example, we have one GIB manufacturer in the country and they have put their prices up by 15% recently.” Around 30,000-40,000 houses are built across New Zealand each year and this kind of volume does not support new suppliers to enter the market or builders to bring in their own supplies, which would help develop and evolve the industry. The other key issue lies with land development, specifically the infrastructure and who pays. Like many developers Peter says it is not feasible for the development community to foot the bill for a region’s growth nor is it practical for councils to pay. “More work needs to be done to create commercially viable options like developers receiving government loans on agreeable terms to progress with infrastructure.” “More work needs to be done to create commercially viable options like developers receiving government loans on agreeable terms to progress with infrastructure for example. “Yes, this would increase consumer costs but we could get to delivering positive outcomes for New Zealanders faster, addressing housing shortages across the country.” Despite these challenges Classic Group is still delivering around 500-600 sections to the market each year, right across the country. The company has a land bank of 2,000 sections but can’t increase the rate it brings these to market due to lack of funding and for infrastructure and red tape that causes unreasonable delays. Peter says the market is certainly slowing down and when interest rates start to fall again, it will take a while for the building industry to ramp back up. Classic Group is still actively looking to acquire land for when that happens. Classic Group’s Current Projects • Kennedy Ridge, Pyes Pa, Tauranga. A 300-lot subdivision. Work is currently being done on the last 100 lots. • East Quarter, Papamoa. Joint venture with Bluehaven Group. 300 lots. First three stages sold. Roading and infrastructure being completed on stage three. • Kaimai Views, Omokoroa. Joint venture with Western Bay of Plenty District Council. 280 lots. Working on the last stages now. • Hunua Views, Drury. 600 lots. Working on Stage six, selling well. • Station View, Queenstown. 73 house and land packages. Only two left. • New development, Porirua. 400 lots. • Warkworth development. 350 lots. • Hamilton development. Joint Venture. 300 lots.
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