Construction site
A labourer works at a construction site in Beijing, June 23, 2014. An oversupply of residential property and a market slowdown have left Chinese developers with their worst cash crunch in more than two years, revealing the extent of China's real estate downturn and paving the way for further consolidation in the sector. Picture taken June 23, 2014. Reuters

Amidst the concerns over soaring house prices, the New Zealand government came under the atack of the opposition over the anti-competitive practices in the building products industry, after a top wallboard maker hinted that it wanted to exit the New Zealand market.

Labour Party's housing spokesman Phil Twyford raised his party's concerns after German-headquartered Knauf Plasterboard said it would review its operations in New Zealand. Kanauf announced on Wednesday that a "review of the Knauf Plasterboard New Zealand structure is under consultation," reports New Zealand Herald.

Inflated House Prices

Mr Twyford said it has become difficult for companies to break into the New Zealand market. The experience of Knauf Plasterboard with its losses in the first 9 months of operations, while struggling to break through the building materials monopoly market, has proved that. Twyford urged the Commerce Commission to urgently investigate the anti-competitive practices in the building industry and alleged that the high cost of building materials is the main reason for the unbearable housing prices.

Competition Essential

New Zealand's plasterboard market is dominated by Fletcher Building. According to a 3 News report, Twyford's wanted to know how plasterboard in New Zealand is 41 percent more expensive than in Australia. "It costs $12,000 for a standard house compared with $8000 in Australia," Twyford said. Even Fletcher's subsidiary Winstone Wallboard has ammassed 94 percent share in the market. This is bad for the building industry, the Labour leader said. The Labour spokesman called for more competition in building materials for lowering the costs and urged the Commerce Commission to release the findings of its investigation into the wallboard market, as announced last year.

Do Not Politicise

Meanwhile, Nick Smith, Building and Construction Minister, appealed the opposition not to politicise the issue. He said wallboard market dominance is being investigated. "It will do good if politicians stayed out of it. Ministers or MPs shouldn't be interfering in the independence of the commission," Smith said.

Only last week, the government introduced a legislation to amend product setting standards after criticism came from importers about the difficulty in getting products approved. In July, the government froze import tariffs on a range of products to cut down construction costs of homes by $3,500. Still, the housing prices are remaining unbated.