Bank South Pacific Financial Group Ltd (BSP) CEO Robin Fleming has said that the bank’s first homeowners loan scheme was still growing despite high property prices and limited land availability. He said that the loan product had provided over K420 million in funds since it began.

“Since its inception in 2014, the BSP First Home Ownership Scheme (BSPFHOS) Loan has assisted 1,260 first home buyers. The total value of loan funded is well over K420 million to date.

“Interest from potential first home buyers continues to grow. However, rising house prices and scarcity of land for development remain a challenge for many first home buyers,” Fleming said.

David Kitchnoge, a Property Developers Association board member, said two main elements influenced housing prices.

“First is the construction cost, which comprises of land development cost plus the cost of building the house itself. Land development cost entails civil works to clear the topography and may include things like flattening hills, backfilling, etc., depending on the contours in the locality.

“It also entails installation of baseline infrastructure such as roads, water and sewerage lines and power lines,” he said, adding that these costs added up.

“Over lay that with the cost of building the house and the total cost of a land and house package go up into the hundreds of thousands of Kina.”

Mr Kitchnoge suggested that high-density dwellings like apartment blocks would increase the yield of each square metre of land used. This would also lower living unit prices. He said, “You decrease the unit cost by putting more dwellings on for the same land development cost.”

The Strata Title law was passed in Parliament recently, and that has paved the way to enable developers to build higher-density dwellings. Each unit can then be sold at a more affordable price.