Housebuilder David O’Sullivan is going against the grain of the property market, putting affordability for first-time buyers at the front of his design. For Mr O’Sullivan, buying a home should be like buying a burger. “If you go along to Red Star Burger, a third of their costs will be food, a third of the costs will be labour, 20% will be the cost of running the business, and they’ll take a profit every time they sell you a burger. “I don’t see why housing should be different,” Mr O’Sullivan said. In response to property prices in the Upper Clutha that Mr O’Sullivan said are out of reach of many working families, Mr O’Sullivan has built two two-bedroom properties in Longview in Lake Hāwea which will be listed for $834,000. Mr O’Sullivan is transparent the pricing of the properties, which reflects the cost of land, materials, the fees associated with building and listing a home, while taking $50,000 per property as a salary. The homes have been built with affordability at the front of mind, with Mr O’Sullivan speaking to mortgage brokers to find out what affordable looks like and working back from there. “We asked what’s a realistic price point and they came back with about $800,000, because then two people working full-time with a 25% deposit only need to earn $33 an hour to get the lending,” Mr O’Sullivan said. Mr O’Sullivan had originally hoped to get the properties under the $800,000 mark — a price he can not believe is being described as affordable — but as the costs added up, so did the price of the property. In selling each of the properties for the costs plus his $50,000 salary, Mr O’Sullivan is leaving a lot of money on the table, with appraisals from real estate agents putting the properties in the $900,000 range. “Quite a few of the real estate agents wanted to sell it but they were all going, ‘oh you know we can get more money for this,’ but that wasn’t the point. “I shouldn’t be holding an auction for these where investors are coming in and competing directly with first-time buyers … it’s not really fair.” The properties are designed to be accessible to first-time buyers, while providing room for growth. “They were always going to be two bedroom, but instead of locking people into a two bedroom property we’ve designed these so its very easy to add on a third or a fourth bedroom later. “Once you get into the market and you’ve got your own house and you’ve paid that mortgage for say six months, you’re in a much stronger position to go back to the bank with a contract to extend the home and increase its value.” Mr O’Sullivan might not like the idea of selling to the highest bidder, but it does serve to simplify things — when you are selling a home for a fixed price and demand outstrips supply, how do you choose who to sell to? It will be a nice problem to have, and one that he hopes to solve by building more homes with affordability at their core. Once the first two properties sell — giving him a proof of concept — the plan is to buy more land to build more affordable homes. When economies of scale kick in, they might get even cheaper. ruairi.oshea@alliedmedia.co.nz
