Q&A: Infrastructure Matters

25 Sep, 2026

AUT Professor John Tookey answers questions on housing, transport, infrastructure, flood risk, project costs and household energy in Aotearoa.

Q: Why are houses so expensive?

We don’t make houses in the same way as we make motorcars or similar products. We don’t mass-produce houses, so we don’t gain the economies of scale that occur when products are manufactured in large quantities. Without those economies of scale, prices generally tend to increase.

This technology issue is combined with the fact that land is in short supply and cannot be created. Materials and labour are also in short supply. In addition, there are very long supply chains from overseas, while fewer people are entering the trades than in the past. As a result, we constantly have to recruit people from overseas to fill construction jobs.

This combination of circumstances means that New Zealand has a very expensive building industry, particularly in relation to housing.

Q: Why is Tip Top corner always so congested, and will IKEA make it worse?

I will answer the second part first: yes, IKEA is likely to make it considerably worse.

The main reason Tip Top corner is consistently congested is the combination of different traffic patterns in Auckland. There is north-to-south transit traffic travelling along State Highway 1 and south towards Wellington. This traffic is continuous and flows through the area.

There is also commuter traffic, with people travelling to and distributing themselves among the various factory units and other destinations. Shoppers add another traffic pattern. The constant cross-flow of these different traffic streams produces congestion.

Q: Why does New Zealand have such a poor rail system?

The principal point to recognise is that New Zealand has a rail system at all. In the 1870s, it was initiated by the Prime Minister at the time, Julius Vogel, who borrowed money from the United Kingdom to build it. Rail was the high-speed internet access of its time. It was the essential technology, and countries regarded a rail system as fundamental to modern development.

In typical New Zealand fashion, we obtained the best rail system we could for relatively little money. That was the principal problem: acquisition cost was the main decision-making factor. Vogel and his team selected a narrow-gauge rail system.

A narrow-gauge system has advantages. It allows tighter turns on railway tracks, which makes it possible to climb the mountainous terrain found in New Zealand and deal with the river valleys. At the time, this made perfect sense.

In the modern day, however, narrow gauge means that high-speed rail is not possible without replacing the entire rail network. The various intersections and crossings would also need to be upgraded. The system was established primarily to transport goods, as it still does, and this has resulted in a suboptimal rail system for current needs.

Improvements have been made, but fundamental problems remain. For example, when ISO containers are moved around the country and the world, they will not necessarily fit the narrow-gauge system, and they may not fit through the tunnels. As a result, the rail system does not have the utility it could provide.

We therefore face a choice. We could remove and rebuild the entire system, which would be phenomenally expensive, or we could continue to make do with what we have.

At present, most rail traffic consists primarily of timber, cattle and milk products travelling from the point of production to the point of embarkation for export. In that role, the rail system is fit for purpose. For passengers, it is much less suitable.

Q: Should I buy a house in a flood-prone area if it has not flooded before?

In short, no. Consult the relevant GIS map and examine the areas affected by 100-year and 50-year weather events. This will provide an indication of the potential risk.

Do not set yourself up to buy a supposed bargain that is actually a liability. Eventually, these properties may not be insurable by major insurance companies, or they may only be insurable at a very high cost.

Q: Does Auckland really need another harbour crossing?

The short answer is yes.

The numbers support that conclusion. New Zealand’s GDP is approximately US$250 billion, give or take a billion. The amount directly associated with Auckland is in the region of US$100 billion, or approximately NZ$180 billion. That is substantial. About 40 per cent of New Zealand’s GDP is dependent on Auckland.

Auckland has to function as a city. The only way Auckland will work in the future is with another harbour crossing. Otherwise, it will consist of two large towns on either side of an inlet, which is not a sustainable proposition.

A great deal of trade travelling north, south, east and west needs to reach harbours and ports, connect with markets and support the wider economy. Auckland needs another harbour crossing. The facts and figures support this, and the difficult reality is that every delay makes the eventual solution more expensive. That is not an acceptable option for a country that aims to be well governed.

Q: On a scale of one to the Leaning Tower of Pisa, how bad is it if I skip getting a builder’s report before buying a house?

It is not a sensible idea. It is important to know as much as possible about a house before purchasing it. Obtaining a builder’s report is worthwhile.

You do not want to find that you have bought a defective property simply because you did not know what to look for. That is the problem a building report can help prevent.

Q: Why is housing provision so difficult?

The market does not necessarily respond quickly to changes in supply needs. The basic issue is that money for housing and construction is borrowed. It must be borrowed from someone willing to lend, and it is borrowed by multiple parties, including the developer and ultimately the purchaser.

This creates a sequence of relatively slow interactions. The construction process itself is also slow. Consequently, housing provision increases gradually rather than responding immediately to changes in the market.

Governments over many years have often presented an overly optimistic account of the housing situation. The problem could be addressed relatively easily if a surplus of housing were built. However, only government has sufficiently deep pockets to create that additional surplus.

Governments may be reluctant to do this because an increased housing supply could reduce the value of existing homes. If that happened, homeowners who are also voters could be adversely affected. Politically, that is a difficult proposition.

Q: Why does everything ever built cost more and take longer than expected?

The reason is expectations. People generally try to be optimistic, and contracts often receive approval on the basis of an optimism bias. A project is described as being ready in three years or costing a particular amount, even though there are likely to be escalation costs.

When construction takes place over an extended period, there is inevitably potential for currency variations between countries, particularly when international products are being purchased. Steel and other materials may come from overseas, and exchange-rate changes can add to the cost. A guaranteed maximum price can therefore increase significantly.

There is also a political incentive to understate acquisition costs in order to secure approval for contracts. If a project were presented as costing an extremely large amount from the outset, it would be less likely to receive support. However, the eventual figure may not be far from the actual construction cost.

Q: My gas hob is on the fritz. Should I replace it with an electric one?

Probably. There are very good electric options, particularly induction cooking, which is efficient, effective and performs well.

There is also a longer-term consideration. Natural gas is among the greenhouse gas emissions that governments are seeking to control. To comply with the Paris Agreement and other climate commitments, consumption of this product needs to be reduced. The wider implications of methane emissions are part of that discussion, although they are a separate issue.

John Tookey is Professor of Construction Management at AUT. This is Infrastructure Matters.