Connection Costs can Equal the Land Value
🤔 Auckland’s Affordable Home Reality Check: When Connection Costs Nearly Equal the Land Value 🫨
https://newsroom.co.nz/2025/06/27/nzs-infrastructure-paradox-when-spending-more-delivers-less/
Inspired by a news article by Nick Clark (When spending more delivers less)
Infrastructure fascinates me. I daresay it is because in Auckland, it now nearly equals (for new ‘modest’ house) the same value as land that it is built on… yes, it is real!
💫 For BROWNFIELD (or in-fill homes)
LAND
🧰 Some homes may have land valued at $120,000
INFRASTRUCTURE and COSTS ASSOCIATED
🧰 Water connection $25,000
🧰 Development Contributions $50,000
🧰 Share of Council fees $10,000
🧰 Power connection $15,000 (including installation)
🧰 Fibre connection $3,500
🧰 Share of public water and wastewater public upgrades $5,000 (yes in-fill does this without compensation)
🧰 Lifting and replacement of private lines (vested to Council) $5,000
🧰 TOTAL $113,500
Naturally, this is a major as the build cost for a small home (structure and fit out) will be about $200,000
So BACK OF ENVELOPE we have for a small home:
💰 Land $120,000
💰 Infrastructure $113,500
💰 Direct Construction $200,000
💰 Finance $50,000
💰 Administration and sales $16,500
💰TOTAL $500,000 (and this excludes any profit margins or contingency or land preparation)
While a developer or spec builder can trim costs, the government can ‘open’ land… surely we can make infrastructure more efficient.
The Newsroom article below reports:
📣 Despite spending heavily (5.8% of GDP annually, roughly $4,500 per person), the country ranks in the bottom 10% of OECD nations for value-for-money.
📣 Is it poor resource deployment rather than insufficient investment. Success depends on whether political leaders have the courage to prioritise value-for-money over political convenience.
🤔 How about we start looking about long-term funding. A friend of mine reported that in San Francisco, their utilities are funded through debt and rates… with finance raised through bonds.
