Average cost of building continues to rise in main centres

Average cost of building continues to rise in New Zealand’s main centres
Media Release
20 June 2018

The latest QV costbuilder report shows the average cost of building a new home in six of New Zealand’s main centres rose on average by 3.4% in the year to April 2018 and has risen 30.7% since the previous peak of 2007.

This rate of increase is faster than the annual rise of 2.7% in the year to October 2017. However, is slightly slower than the annual rate of 3.5% to April 2017, seen in the last report, suggesting there is still some growth in the residential market.

Our data also shows the average cost of building a standard 140m², three bedroom, one bathroom home has increased with Auckland leading the way in the year to April 2018, as shown below:

1. Auckland costs increased 2.9% to an average cost of $281,750;
2. Dunedin costs increased 2.8% to $261,625;
3. Waikato costs increased 2.7% to $266,875;
4. Christchurch costs increased 2.2% to $285,250;
5. Wellington costs increased 1.7% to $264,250; and
6. Palmerston North costs increased 1.4% to $259,875.

In terms of the various categories of residential buildings within QV costbuilder, there has been the greatest increase in the construction costs of a 150m², three or four bed, one or two bath home, which increased by around 4.7% for all regions, with Auckland and Christchurch increasing the most, as below:

1. Auckland costs increased 5.7%, rising to an average cost of $310,315;
2. Christchurch costs increased 5.7%, to $311,250;
3. Dunedin costs increased 4.9% to $282,190;
4. Waikato costs increased 4.4% to $289,690;
5. Palmerston North costs increased 3.8% to $282,190; and
6. Wellington costs increased 3.4% to $285,940.

QV costbuilder Spokesperson Greg Thompson said, “Building costs continue to rise in all regions, with Christchurch, followed by Auckland, being the most expensive places to build a home out of the six cities currently measured by QV costbuilder.”

“It’s important to remember these figures are averages and the cost of building any home will always be dependent on the level of finishes, internal layout, and whether it has a single or double garage.”

QV costbuilder figures exclude other costs including: 
The cost of land
Demolition of existing structures on the site
Additional costs due to building code changes
Increased structural requirements and external works such as landscaping, driveways and parking areas
Utilities such as getting power, water, gas, drainage, phone/data mains from public connection to 3 metres from the building
Balconies and covered ways
Any loose furniture, fittings and equipment
Professional, council, and legal fees
GST

Meanwhile, Rider Levett Bucknall (a leading independent organisation in cost management and quantity surveying) has released their latest quarterly report (Forecast Report 87, New Zealand Trends in Property and Construction, Second Quarter 2018) and a number of items stand out:
Acute labour shortages, particularly for skilled workers, are still apparent within the construction industry although migrants have helped ease shortages;
Underlying construction demand remains strong, but capacity constraints continue to hamper the degree to which construction activity can ramp up;
Expect further growth in demand for apartments and townhouses over the coming years, particularly given the Government’s plans to underwrite financing of housing developments as part of its Kiwibuild programme to build 100,000 dwellings over the next decade;
Fletcher Building’s exit from the sector is putting upward pressure on construction costs;
Construction should be solid for the next few years, as house-building activity lifts to meet increased demand from the surge in population in recent years.

Finally, RLB forecast that construction cost inflation will peak at just below 5% before moderating to 4% by late 2019 and then ease to around 3.5% in late 2020, as capacity pressures in the construction sector eases.

QV costbuilder is an arm of state-owned enterprise, Quotable Value (QV) and provides the latest construction cost data to the property and construction industries through an online subscription web platform tool, which can be accessed on any device. Subscribers can access a comprehensive range of building costs associated with the construction of various buildings, including residential and commercial properties.

QV costbuilder provides the cost of a huge range of residential dwellings including small medium and large sized homes including one & two storey homes, two or three storey townhouses, multi-storey apartments, retirement village units and apartments.

QV costbuilder also supply costs on a variety of other buildings including industrial and commercial.

For further information or to subscribe to QV costbuilder go to www.qvcostbuilder.co.nz

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