Pre-fabricated housing is not a new concept. It has been used successfully in Europe and the US for a number of decades and has a short but unspectacular history – thus far – in New Zealand.
But as we begin to seek housing shortage solutions, the pre-fab home may yet have its day. There are a number of companies, both established builders and start-ups looking to win the treasured “first to market” gold medal.
Of course, the question for us here at Opteon, how do you value a pre-fab home? Will we conduct the valuation any differently to that of a traditionally constructed home? And will the valuation figure itself differ greatly?
Let’s investigate!
Pre-fabs often contain modular sections or pieces than can be connected together to create different sizes and configurations. The key differentiator is that they are built off site and shipped to site when completed or near completed.
Pre-fab housing isn’t for everyone. At this stage, it generally suits large scale affordable housing projects.
Advantages of building off site include:
Challenges faced by manufacturers of Pre-fab housing include:
The new Labour-led Government’s Minister for Housing Phil Twyford has set up an initiative known as Kiwibuild. From Kiwibuild’s website:
“The Government has committed $2 billion for KiwiBuild, an ambitious programme that aims to deliver 100,000 affordable, quality homes for first home buyers over the next decade. 50,000 of these homes will be in Auckland.”
Realistically, the only way this can be done is by using pre-fab housing techniques. There are already a number of vendors claiming to be the first to market with a completed project of bulk, economy housing at affordable prices.
One developer, Solution Street, part of Legacy Property, featured in the media lately with a 10-unit development in Mangere. They have just hit the market with their offering of a 70sqm, 2-bedroom, single bathroom terraced home on a fee simple site starting from $519,000.
Solution Street’s development at View Road, Mangere, Auckland
Solution Street is using established builder Stanley Group as their supplier on the View Road project as well as Matrix Homes on other projects located around the greater Auckland area.
We understand the cost to construct is currently at around $2200/sqm plus GST for the finished product, which is actually around the same as current traditional building techniques. The cost-benefit lies in the time saved to complete the project. As they say, time is money!
Pre-fab housing construction in New Zealand
When it comes to valuing pre-fab houses, we here at Opteon believe they will likely be valued the same as any other houses in the marketplace.
Assumptions will be made that the structure is weathertight and meets code but it is essentially a regular house or terraced house, and will be valued under the same criteria which means comparing sales of similar houses within the area.
Some of the factors we look to compare as property value experts are location, tenure of land (fee simple vs cross lease vs unit title), age, floor area, number of bedrooms, number of bathrooms, outdoor living, aspect, surrounding environmental factors, and views and general appeal, among other factors.
Analysis is performed using multiple methodologies, mainly ‘direct comparison’ which compares the subject with each sale and secondly, ‘summation’ which compares square metre rates of land and buildings to arrive at a market value.
It’s as the market matures, in particular, the secondary market, and we gain more data as to how these types of properties are received, when we’ll be able to truly see their value.