October 5, 2024 • 13 mins
The government has announced that they will temporarily underwrite private housing developments to support developers who are struggling to pre-sell enough dwellings to get developments off the ground.
The development must have a minimum of 30 houses and the developer must own or have legal use of the land.
CEO of Williams Corporation, Matthew Horncastle, joins Tim Beveridge on The Weekend Collective to discuss further.
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Speaker 1 (00:05):
You're listening to the Weekend Collective podcast from News talks'd be.
Speaker 2 (00:10):
The government has announced that they will temporarily underwrite private
housing developers developments or developers should I say, to support
developers who are struggling to pre sell and to basically
finance said of their developments and get enough dwellings pre
sold to get developments off the ground. The developments must
have a minimum of thirty houses and the developer must
(00:32):
own or have legal use of the land. And to
discuss that, CEO of Williams Corporation, Matthew Horncastle is with
us now. Matthew good afternoon.
Speaker 3 (00:42):
Hello Tim, Thank you very much for having me.
Speaker 2 (00:44):
So what's your reaction to this announcement or did you
sort of have wind of it in advance over the
last few weeks or so.
Speaker 3 (00:53):
Yeah, we sort of saw it coming. We were involved
in discussions and we sort of hear things before they happen,
because you hear the ideas being bounced around and just
before I give my opinion, and I want to preface
it with I'm actually really happy with this government. I
think they've done a great job in a lot of areas,
but I am critical of this policy, like I don't
(01:17):
think the government should be underwriting private projects. I don't
think the government should be using taxpayers money to allow
private developers to do private projects. I think this creates
a whole lot of complexities for where you can essentially
have favoritism or just taxpayers money used in a manner
(01:38):
that's not in the best interest of the taxpayer.
Speaker 2 (01:40):
Yeah.
Speaker 3 (01:42):
When I look at this, I think, what are we
trying to achieve. We're trying to achieve affordable housing for
the people of New Zealand, and it feels like they're
treating the symptom, not the cause. And if we want
to create good quality, affordable housing for the people of
New Zealand, in my opinion, the best way to do
this is free market capitalism. We have to deregulate, we
(02:07):
need to allow people to trade, We need to have
more competitors in the market and allow markets to trade freely.
And I think some crony capitalist environment isn't going to
be the best outcome for the people in New Zealand.
Speaker 2 (02:19):
Okay, so Williams Corporation. Actually, just for those who don't know,
because you guys obviously are residential property builders, what sort
of what's an example of a development. What sort of
scale are you guys working out?
Speaker 3 (02:31):
So in the current market, we sell about twenty houses
a month. We have development offices across christ Church, Wellington,
Auckland and Totonger, so we officer. We trade in the
major centers. Our key piece of business is infel residential,
so we're going into existing suburbs, preferably city centers, and
(02:53):
we're buying land brownfield band so either bear sites or
old housing and we're redeveloping that with infral resk. We
do a little bit of apartments, We mostly do townhow
we do some standalone dwellings. At the peak of the market,
we were sort of doing peak of the market for
those that don't know, was twenty twenty one. We were
(03:14):
sort of having years where we were selling six hundred
and fifty seven hundred homes and even months where we
would sell one hundred homes. But we've sort of settled
into this current market, which is a lower volume market.
Speaker 2 (03:27):
So well, I mean, will you guys benefit from this
policy if you have the right sort of development, I
think you need a thirty is it a thirty house
or thirty dwelling minimum.
Speaker 3 (03:36):
We would majority of our projects would comply with that. Look,
I could absolutely benefit from this personally, but just as
a tax payer and as a member of this country,
I don't think it's the right thing for the country.
I have bought development land from the government where they've
wanted certain outcomes from that land, and I've got that
(03:58):
land at a reduced price to provide the outcomes that
the government wanted. I've sold houses to housing music on like,
I've participated in these government programs, and also like I
represent lots of stakeholders because Williams Corporation obviously has external
capital within the company and so we will apply for
(04:19):
this and we will probably use it. But it doesn't
mean that it's the right thing for the country. It
doesn't mean that my opinion is to support it. So
I get a little bit of a dichotomy there.
Speaker 2 (04:30):
No, No, I just think, no, a dichotomy between your
honest opinion and the fact that if the law is
the law, of course you're gonna utilize whatever is available.
What need is the government responding to then.
Speaker 3 (04:43):
Well, I think the government's looking at immigration and population growth.
So approximately New Zealand's population growth about one hundred and
fifty thousand people and that comes with a natural burst
over deaths of twenty thousand and a net positive immigration
of one hundred and thirty thousand, now one hundred and
fifty thousand people. We've got a population of five million people,
(05:05):
so our population is growing at three percent now, that
is absolutely huge. There would be almost no First World
countries growing at that rate. So what's happening is we've
got a weak economy and we've got very little construction happening,
but a huge amount of immigration. And so any analyst
(05:28):
can look at the market twelve months from now, twenty
four months from now and see us going back into
a housing crisis where houses start increasing at rapid rates
and it puts strain on the economy. And so I
can see and sympathize with what the government's trying to achieve.
And again that's why I wanted to start the conversation
(05:48):
by being complementary to the government, because I can see
what they're trying to do. But in my opinion, the
way for us to get there is actually deregulation, Like
we need to reduce some of the council and government controls.
We need to allow free markets to trade, and we
(06:08):
need to allow competitors to come in different suppliers of materials.
People need to be able to utilize the lands they
own more effectively putting what they want to put on
their land. And that's how we're going to create more
affordable housing. You just need to read any of the
classic economics books like go read Wealth of Nations or
any of these great books, and we know that the
(06:31):
way for wealth and prosperity and affordable goods and services
is free people participating in a free market. Syms the answers.
Speaker 2 (06:41):
Yeah, I think there'd be those who be listening when
they hear sort of deregulation thing that obviously there is
a place for regulation. And when you know, because you
don't want slum dwellings, and you know, the worst sort
of things to happen as a result of that. I mean,
how do you where do you draw? You know, because
there's always some.
Speaker 3 (06:57):
Very very good comment, very very good comment. You're a
one hundred percent right, there is dichotomy. New Zealand's not
absolutely New Zealand. New Zealand couldn't trade in a completely
free market because we used to a regulated environment. And
for the purpose of this discussion, I'm not discussing engineering codes.
(07:17):
I'm not discussing fire codes. I'm not discussing things that
fundamentally put at risk human health and safety. What I'm
probably talking about is things like council development contributions. Like
let's say you would go build a house in Lower Hut.
Two years ago, it would have cost you thirty five
(07:39):
thousand dollars to create your lot. That's just your base
fees to create a lot of council before you have
your utilities. Today it's sixty five thousand. So that's gone up.
And so essentially then and then what happens is we
have these planning and zoning and urban design requirements that
make it very slow, very restrictive, very time consuming, and
(08:02):
the only person that pays for that is the end customer.
We're obviously in quite a tax environment. Everyone's paying a
fifteen percent sales tax on the house. If you're buying
a million dollar home, you're approximately paying one hundred and
fifty thousand dollars a t UST to the government. Yeah,
these are these are large restricting factors.
Speaker 2 (08:23):
Is the reason that they've gone for this, then, is
because it's something they can sort of attap. They can
instantly turn on. So there'll be developers who might be
feeling a little bit shy about in particular because they're
struggling to get the right level of buy in at
the markets. You know, the cost of materials and things.
I don't know this. I'm not a developer. I don't
understand at all. But yeah, you know, we know that.
(08:45):
I do know that developers are finding it increasingly tough
to get developments off the ground. So is the reason
they're doing is because basically they can flick a switch
and it might enable a whole lot of building to
get underway that was going to struggle.
Speaker 3 (08:57):
But where do you where do you draw the line?
Do you now? Should this be offered to individuals building
their personal home? Should it be offered to only big
corporates doing big developments? What about a small builder that
can only build five houses? He now doesn't get a
government under right, But me, as a large company that
can build blocks of thirty houses? Does does my company
(09:19):
get supported? What about the other companies my size? You see,
you start creating all of these complexities and unfair factors
that I think the government can be criticized on. Let's
say you have a project and the builder can't sell
the last teen units. The government now owns those ten units.
(09:42):
The government's now owning vacant new housing. They can then
sell that to kying Aura, or they're selling it to
whoever they wish. There's just they've just opened a whole
level of work and complexity and nuance and attack factor
that I see as completely unnecessary. Where that same resource
(10:04):
to energy could just go through and say, right, we
are our big wins. Where can we rezone land? Where
can we make planning rules easier? Where can we remove
nuanced time and cost.
Speaker 2 (10:19):
Which it looks like they're trying to do. I mean
that is something they look like they're trying to do
as well, isn't it.
Speaker 3 (10:25):
Yes, Yes, I don't disagree, and I agree with you
that just because you do one thing doesn't mean you
can't do another. Probably the main area where it concerns
me is you're taking taxpayers money because everything's paid for
by the taxpayer, and then you're using this to financially
underwrite large private companies projects Like to me, it just doesn't.
Speaker 2 (10:48):
I think you've made I agree. I think you made
the case very well. Can I just ask one other thing?
Is there also a complication that when it comes to
assessing which developments you're going and they're talking about established
developers with a good track record and all that, but
is there still the danger that you're putting due diligence.
I guess because it's going to be about to government
(11:09):
officials to assess whether a development is worth backing. So
you don't end up buying into a dog, so to speak.
Speaker 3 (11:17):
You hit the nail right on the head. And also
what's interesting about free markets. I can launch two projects.
I could swear that I'm going to sell one in
a day and it's the greatest thing. Ever that project
doesn't sell and I have to change it, and another
project that I was less certain of sells ballistically. So
(11:39):
markets have complexities. And this is actually where pre sales
are very very important, because what you do is you
learn what the market wants, not what the market tells
you they want, what the market will physically part with
the money in their pocket for. There's a fantastic book
written about this principle called the Lean Startup, and they
(12:00):
just discuss the difference between what people say they want
to buy and what people physically part with their money for.
And now, all of a sudden you have a government
official deciding based on their understanding and their merits using
the tax past money, so money that's not the is
to decide what course to back. And that's where the
(12:23):
current free market system works so well. I have to
go to the market. I have to convince people that
this is right for them. They part with their money
in the form of pre sales. I then go to
the funding institutions and show that there's proof of market
demand and then the resources are allocated to build that project.
It's a really good system that's good for the country.
Speaker 2 (12:46):
Okay, Hey, that absolutely illuminating. Matthew, thank you so much
for your time. Really appreciate your candor on this.
Speaker 3 (12:53):
Thank you very much. You have a great day. I
appreciate it.
Speaker 2 (12:55):
Thanks very much. That is a CEE Williams Corporation. Matthew
Hallcastle hands up, who is surprised at that interview. He's
a guy whose company stands to develop benefitrom this. He
likes what the government are doing, except on this one. No.
Speaker 1 (13:09):
For more from the Weekend Collective, listen live to News
Talk ZEDB weekends from three pm, or follow the podcast
on iHeartRadio.
You're listening to the Weekend Collective podcast from News talks'd be.
Speaker 2 (00:10):
The government has announced that they will temporarily underwrite private
housing developers developments or developers should I say, to support
developers who are struggling to pre sell and to basically
finance said of their developments and get enough dwellings pre
sold to get developments off the ground. The developments must
have a minimum of thirty houses and the developer must
(00:32):
own or have legal use of the land. And to
discuss that, CEO of Williams Corporation, Matthew Horncastle is with
us now. Matthew good afternoon.
Speaker 3 (00:42):
Hello Tim, Thank you very much for having me.
Speaker 2 (00:44):
So what's your reaction to this announcement or did you
sort of have wind of it in advance over the
last few weeks or so.
Speaker 3 (00:53):
Yeah, we sort of saw it coming. We were involved
in discussions and we sort of hear things before they happen,
because you hear the ideas being bounced around and just
before I give my opinion, and I want to preface
it with I'm actually really happy with this government. I
think they've done a great job in a lot of areas,
but I am critical of this policy, like I don't
(01:17):
think the government should be underwriting private projects. I don't
think the government should be using taxpayers money to allow
private developers to do private projects. I think this creates
a whole lot of complexities for where you can essentially
have favoritism or just taxpayers money used in a manner
(01:38):
that's not in the best interest of the taxpayer.
Speaker 2 (01:40):
Yeah.
Speaker 3 (01:42):
When I look at this, I think, what are we
trying to achieve. We're trying to achieve affordable housing for
the people of New Zealand, and it feels like they're
treating the symptom, not the cause. And if we want
to create good quality, affordable housing for the people of
New Zealand, in my opinion, the best way to do
this is free market capitalism. We have to deregulate, we
(02:07):
need to allow people to trade, We need to have
more competitors in the market and allow markets to trade freely.
And I think some crony capitalist environment isn't going to
be the best outcome for the people in New Zealand.
Speaker 2 (02:19):
Okay, so Williams Corporation. Actually, just for those who don't know,
because you guys obviously are residential property builders, what sort
of what's an example of a development. What sort of
scale are you guys working out?
Speaker 3 (02:31):
So in the current market, we sell about twenty houses
a month. We have development offices across christ Church, Wellington,
Auckland and Totonger, so we officer. We trade in the
major centers. Our key piece of business is infel residential,
so we're going into existing suburbs, preferably city centers, and
(02:53):
we're buying land brownfield band so either bear sites or
old housing and we're redeveloping that with infral resk. We
do a little bit of apartments, We mostly do townhow
we do some standalone dwellings. At the peak of the market,
we were sort of doing peak of the market for
those that don't know, was twenty twenty one. We were
(03:14):
sort of having years where we were selling six hundred
and fifty seven hundred homes and even months where we
would sell one hundred homes. But we've sort of settled
into this current market, which is a lower volume market.
Speaker 2 (03:27):
So well, I mean, will you guys benefit from this
policy if you have the right sort of development, I
think you need a thirty is it a thirty house
or thirty dwelling minimum.
Speaker 3 (03:36):
We would majority of our projects would comply with that. Look,
I could absolutely benefit from this personally, but just as
a tax payer and as a member of this country,
I don't think it's the right thing for the country.
I have bought development land from the government where they've
wanted certain outcomes from that land, and I've got that
(03:58):
land at a reduced price to provide the outcomes that
the government wanted. I've sold houses to housing music on like,
I've participated in these government programs, and also like I
represent lots of stakeholders because Williams Corporation obviously has external
capital within the company and so we will apply for
(04:19):
this and we will probably use it. But it doesn't
mean that it's the right thing for the country. It
doesn't mean that my opinion is to support it. So
I get a little bit of a dichotomy there.
Speaker 2 (04:30):
No, No, I just think, no, a dichotomy between your
honest opinion and the fact that if the law is
the law, of course you're gonna utilize whatever is available.
What need is the government responding to then.
Speaker 3 (04:43):
Well, I think the government's looking at immigration and population growth.
So approximately New Zealand's population growth about one hundred and
fifty thousand people and that comes with a natural burst
over deaths of twenty thousand and a net positive immigration
of one hundred and thirty thousand, now one hundred and
fifty thousand people. We've got a population of five million people,
(05:05):
so our population is growing at three percent now, that
is absolutely huge. There would be almost no First World
countries growing at that rate. So what's happening is we've
got a weak economy and we've got very little construction happening,
but a huge amount of immigration. And so any analyst
(05:28):
can look at the market twelve months from now, twenty
four months from now and see us going back into
a housing crisis where houses start increasing at rapid rates
and it puts strain on the economy. And so I
can see and sympathize with what the government's trying to achieve.
And again that's why I wanted to start the conversation
(05:48):
by being complementary to the government, because I can see
what they're trying to do. But in my opinion, the
way for us to get there is actually deregulation, Like
we need to reduce some of the council and government controls.
We need to allow free markets to trade, and we
(06:08):
need to allow competitors to come in different suppliers of materials.
People need to be able to utilize the lands they
own more effectively putting what they want to put on
their land. And that's how we're going to create more
affordable housing. You just need to read any of the
classic economics books like go read Wealth of Nations or
any of these great books, and we know that the
(06:31):
way for wealth and prosperity and affordable goods and services
is free people participating in a free market. Syms the answers.
Speaker 2 (06:41):
Yeah, I think there'd be those who be listening when
they hear sort of deregulation thing that obviously there is
a place for regulation. And when you know, because you
don't want slum dwellings, and you know, the worst sort
of things to happen as a result of that. I mean,
how do you where do you draw? You know, because
there's always some.
Speaker 3 (06:57):
Very very good comment, very very good comment. You're a
one hundred percent right, there is dichotomy. New Zealand's not
absolutely New Zealand. New Zealand couldn't trade in a completely
free market because we used to a regulated environment. And
for the purpose of this discussion, I'm not discussing engineering codes.
(07:17):
I'm not discussing fire codes. I'm not discussing things that
fundamentally put at risk human health and safety. What I'm
probably talking about is things like council development contributions. Like
let's say you would go build a house in Lower Hut.
Two years ago, it would have cost you thirty five
(07:39):
thousand dollars to create your lot. That's just your base
fees to create a lot of council before you have
your utilities. Today it's sixty five thousand. So that's gone up.
And so essentially then and then what happens is we
have these planning and zoning and urban design requirements that
make it very slow, very restrictive, very time consuming, and
(08:02):
the only person that pays for that is the end customer.
We're obviously in quite a tax environment. Everyone's paying a
fifteen percent sales tax on the house. If you're buying
a million dollar home, you're approximately paying one hundred and
fifty thousand dollars a t UST to the government. Yeah,
these are these are large restricting factors.
Speaker 2 (08:23):
Is the reason that they've gone for this, then, is
because it's something they can sort of attap. They can
instantly turn on. So there'll be developers who might be
feeling a little bit shy about in particular because they're
struggling to get the right level of buy in at
the markets. You know, the cost of materials and things.
I don't know this. I'm not a developer. I don't
understand at all. But yeah, you know, we know that.
(08:45):
I do know that developers are finding it increasingly tough
to get developments off the ground. So is the reason
they're doing is because basically they can flick a switch
and it might enable a whole lot of building to
get underway that was going to struggle.
Speaker 3 (08:57):
But where do you where do you draw the line?
Do you now? Should this be offered to individuals building
their personal home? Should it be offered to only big
corporates doing big developments? What about a small builder that
can only build five houses? He now doesn't get a
government under right, But me, as a large company that
can build blocks of thirty houses? Does does my company
(09:19):
get supported? What about the other companies my size? You see,
you start creating all of these complexities and unfair factors
that I think the government can be criticized on. Let's
say you have a project and the builder can't sell
the last teen units. The government now owns those ten units.
(09:42):
The government's now owning vacant new housing. They can then
sell that to kying Aura, or they're selling it to
whoever they wish. There's just they've just opened a whole
level of work and complexity and nuance and attack factor
that I see as completely unnecessary. Where that same resource
(10:04):
to energy could just go through and say, right, we
are our big wins. Where can we rezone land? Where
can we make planning rules easier? Where can we remove
nuanced time and cost.
Speaker 2 (10:19):
Which it looks like they're trying to do. I mean
that is something they look like they're trying to do
as well, isn't it.
Speaker 3 (10:25):
Yes, Yes, I don't disagree, and I agree with you
that just because you do one thing doesn't mean you
can't do another. Probably the main area where it concerns
me is you're taking taxpayers money because everything's paid for
by the taxpayer, and then you're using this to financially
underwrite large private companies projects Like to me, it just doesn't.
Speaker 2 (10:48):
I think you've made I agree. I think you made
the case very well. Can I just ask one other thing?
Is there also a complication that when it comes to
assessing which developments you're going and they're talking about established
developers with a good track record and all that, but
is there still the danger that you're putting due diligence.
I guess because it's going to be about to government
(11:09):
officials to assess whether a development is worth backing. So
you don't end up buying into a dog, so to speak.
Speaker 3 (11:17):
You hit the nail right on the head. And also
what's interesting about free markets. I can launch two projects.
I could swear that I'm going to sell one in
a day and it's the greatest thing. Ever that project
doesn't sell and I have to change it, and another
project that I was less certain of sells ballistically. So
(11:39):
markets have complexities. And this is actually where pre sales
are very very important, because what you do is you
learn what the market wants, not what the market tells
you they want, what the market will physically part with
the money in their pocket for. There's a fantastic book
written about this principle called the Lean Startup, and they
(12:00):
just discuss the difference between what people say they want
to buy and what people physically part with their money for.
And now, all of a sudden you have a government
official deciding based on their understanding and their merits using
the tax past money, so money that's not the is
to decide what course to back. And that's where the
(12:23):
current free market system works so well. I have to
go to the market. I have to convince people that
this is right for them. They part with their money
in the form of pre sales. I then go to
the funding institutions and show that there's proof of market
demand and then the resources are allocated to build that project.
It's a really good system that's good for the country.
Speaker 2 (12:46):
Okay, Hey, that absolutely illuminating. Matthew, thank you so much
for your time. Really appreciate your candor on this.
Speaker 3 (12:53):
Thank you very much. You have a great day. I
appreciate it.
Speaker 2 (12:55):
Thanks very much. That is a CEE Williams Corporation. Matthew
Hallcastle hands up, who is surprised at that interview. He's
a guy whose company stands to develop benefitrom this. He
likes what the government are doing, except on this one. No.
Speaker 1 (13:09):
For more from the Weekend Collective, listen live to News
Talk ZEDB weekends from three pm, or follow the podcast
on iHeartRadio.
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