The pressure is easing — but unevenly
New Zealand construction cost growth has broadly steadied in June, according to the latest QV CostBuilder update — welcome news for mortgage brokers working with clients on new builds, renovations, or development finance.
Martin Bisset, QV CostBuilder spokesperson and quantity surveyor, described a notable shift from the turbulence of recent months.
"After several months of fuel-related pressure, construction cost growth has taken its foot off the gas," Bisset said, adding that easing diesel prices had brought down costs across trades that rely heavily on machinery and transport.
The most significant driver of the improvement has been a 6.5% fall in diesel prices in June. That reduction flowed directly into fuel-intensive construction categories, with excavation recording the largest single decline at -1.5%. Site preparation, substructure, exterior works, piling, and demolition all posted smaller reductions in the same range. Concrete-related trades also softened, with ready mixed structural concrete rates falling 0.7% and concrete blockwork down 0.5%.
Not all trades moved in the same direction
The picture was not uniformly positive. Plumbing costs rose 0.5% due to higher product prices, and carpentry edged up 0.2% on the back of a range of product price increases — a reminder that supply-side pressures have not been fully resolved across the sector.
Bisset's read on the broader situation was measured.
"Some costs have come back, and others are still inching upward, but the broader picture is steadier this month," he said. "Anyone planning a project should continue to allow for some movement in costs, as some volatility remains."
The Middle East wildcard
The caveat that will matter most for brokers advising clients on build costings is the Middle East. Despite June's diesel relief, Bisset flagged that diesel remains more than 50% above where it started the year.
"It's still an important factor to watch as the situation in the Middle East develops," he said.
The June stabilisation is a reprieve from two compounding pressures, not just one. The Cordell Construction Cost Index was already rising before the oil shock, up 0.9% in the December 2025 quarter — its fastest pace in over a year — with Cotality's Kelvin Davidson warning that cost growth "could pick up again" as the sector recovered.
The construction pipeline is also filling quickly. New home consents reached 39,087 in the year to April 2026 — up 16% year-on-year — suggesting the current window of cost stability may face renewed pressure as activity lifts, with Westpac noting that fuel cost increases were already flowing through to construction material costs, with some increases described as substantial by industry contacts.
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