Average cost of building a home now up 9.5% from last year
Building a home in New Zealand’s main centres now costs 9.5% more on average than last year, but price increases have considerably eased in 2023, according to QV CostBuilder.
The New Zealand construction cost database, powered by state-owned enterprise Quotable Value (QV), showed that the average cost of building a standard three-bedroom home climbed 9.5% in a year, including by 3.8% since its last major update in December.
The figure was lower than the 20.9% annual rise at the same period last year and an 11.3% annual lift to December.
“Ordinarily a 9.5% increase in the cost to build a standard three-bedroom home would be a lot — and it certainly is by historic standards,” said Martin Bisset, QV CostBuilder quantity surveyor. “But the good news is it’s just less than half the rate of building cost inflation measured at the same time last year.
“Though construction costs continue to rise, they have definitely slowed throughout the first six months of 2023. It looks as though they are starting to level out now, with the worst of the construction inflation boom now firmly behind us and strong demand for materials and labour continuing to ease across much of the country.”
Bisset warned, though, that there remained a great deal of uncertainty in the building industry and the economy as a whole, making it tough to clearly predict how costs will evolve throughout the rest of 2023, but it’s likely they will eventually stabilise.
“With inflation and interest rates stubbornly high, a general election in October, geopolitical issues and rebuild work on Cyclone Gabrielle still to fully get going, there is still a lot of economic instability in the domestic construction market,” he said.
Since QV CostBuilder’s December update, costs related to sanitary plumbing saw the biggest elemental price increase, up 4.9%. Costs related to interior doors also rose by 3.5%, with windows and exterior doors climbing 3.1% due to having to meet the requirements of the new H1 energy efficiency regulations.
On average, each trade rate has also jumped by 2.5% since December, with suspended ceilings up 16.2%. Rounding up the five largest price increases since the last update were fireproofing (10.1%), metal framing (8.9%), hardware (8.8%), and roof coverings (8.1%).
“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,” Bisset said.
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