Nearly three-quarters of the overall costs of leaky homes will be borne directly by affected households, ANZ bank is estimating.In its weekly Market Focus newsletter, ANZ said that under the latest government proposal 23,500 houses would qualify for a pa
Nearly three-quarters of the overall costs of leaky homes will be borne directly by affected households, ANZ bank is estimating.
In its weekly Market Focus newsletter, ANZ said that under the latest government proposal 23,500 houses would qualify for a package announced around the time of the budget in May. In those cases 25 percent of the cost of repairs would be borne by government, 25 percent by local councils and 50 percent by homeowners.
But PricewaterhouseCoopers had estimated the number of potential failures could range between 22,000 and 89,000.
Assuming the "central estimate" 42,000 houses were affected, the PWC report estimated the total economy-wide cost of leaky buildings would be $11.3 billion.
In that case, government and local councils would still provide $1.6b each for 23,500 houses, but with 42,000 houses they would each be providing only 14 percent of the total cost of $11.3b.
In a rough breakdown of the costs, ANZ said that in the 42,000 house scenario, homeowners would have to come up with 72 percent of the costs, amounting to $8.1b.
Assuming 5000 houses had already had remedial work done, then the 23,500 houses covered by the new scheme accounted for nearly two-thirds of the 37,000 remaining houses.
And assuming repair work on homes under the new plan was spread over the next 10 years at an average of 2350 dwellings per year, then the boost to construction sector activity would be around $600 million in 2008 dollars, or around 0.2 percent of GDP per year over the next decade.
If work was also done on the 13,500 buildings not covered by the new offer over the next decade, then 3700 homes per year would be repaired, meaning the value of repairs was equivalent to 0.3 percent of GDP per year.
While construction section activity was bound to benefit from the remedial work, most of the costs would be borne by the household sector, ANZ said.
"Owners affected by leaky homes will be significantly out of pocket, and this is likely to weigh down on consumer spending."
If $8.1b of repairs was borne by households that would be about 1.3 percent of total net household wealth.
