Construction Cost Growth Continuing To Cool

The average cost of building a home in New Zealand Aotearoa’s main centres has increased by 0.3% this quarter and 5.2% since February 2023.

This is in stark contrast to previous CostBuilder construction cost updates in the Covid-19 era, which showed the cost of building a standard three-bedroom home increased by an average of 20.9% in the year ending June 2022, and by an average of 9.5% in the year ending June 2023.

“Since the onset of Covid-19, we’ve seen some very rapid building cost inflation. I’m pleased to say this is now firmly on the downward trend, reflecting a somewhat improved economic outlook internationally and the easing in many of the global supply chain difficulties that arose throughout the pandemic,” said CostBuilder spokesperson and quantity surveyor Martin Bisset.

“However, there is still an abundance of economic and political uncertainty that could still impact construction costs in the future – including the Israel-Hamas conflict and the ongoing disorder on the Red Sea.”

More than 10,700 rates were updated in CostBuilder’s February update, producing roughly 25,000 changes to the data across six centres, with trade rates falling by 0.1%. This included a decrease of 28% for T&G plywood flooring panels and a 4% fall in diesel prices.

Elemental rates increased by 0.2% on average since CostBuilder’s last update in December. The cost of ceiling finishes increased by 0.7%, structural walls increased by 0.6%, and exterior walls/exterior finish also went up 0.5%.

“There are no significant reasons for these increases, but some are related to a small increase in the labour rate. Fuel costs have come down, inflation is in decline, and increased migration is helping to fill labour shortages, which is helping to keep most costs in check,” Mr Bisset said.

“It’s important to remember these figures are averages and the cost of building will always be dependent on the level of finishes, internal layout, and all manner of other elements, including whether or not a home has a single or double garage.”

CostBuilder is an online subscription-based building cost platform, powered by state-owned enterprise Quotable Value (QV), with a database of more than 60,000 rates across Auckland, Hamilton, Palmerston North, Wellington, Christchurch and Dunedin.

It covers everything from the building costs per square metre for warehouses, schools, and office buildings, to the approximate retail supply cost of GIB and more than 8,000 other items, plus labour rates, labour constants, and more.

In a change to previous years, CostBuilder will now have four major updates a year – February, May, August and November – with monthly updates in-between.

Visit CostBuilder at costbuilder.qv.co.nz.

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