Residential building costs rise 0.4% in March quarter

Construction costs have largely flatlined, according to QV CostBuilder, which measures the average cost of building a standard one- or two-storey home in Auckland, Wellington, Christchurch, Hamilton, Dunedin and Palmerston North.

Costs rose 0.4% in the March quarter, bringing the year-on-year increase to 1.5%.

That compares to the double-digit annual price growth that occurred in 2021, 2022 and 2023.

“Construction costs continue to flatten out for the most part, weighed down by challenging economic conditions and reduced demand as a result,” QV CostBuilder Quantity Surveyor Martin Bisset said.

“We all remember the Gib [plasterboard] crisis three years ago. Fortunately, we’re not having any of these sorts of issues today – global supply chains are now operating more or less as they should be, and demand for materials has dropped dramatically. This is helping to keep a lid on prices.”

However, Mr Bisset warned that geopolitical instability might trigger an increase in future price growth.

“There continues to be high levels of tension and uncertainty in international relations right now, with armed conflicts, trade wars and a general sense of political volatility posing a risk not only to construction costs but also to the economy as a whole,” he said. 

“Anything that impedes the flow of goods across the world has the potential for increasing the difficulty and therefore the cost of acquiring building materials here in Aotearoa. We all saw the impact that Covid-19 had.”

5 tips for building a home on time and on budget

1. Set a realistic budget – Factor in all costs, including land, permits and site preparation, and include a contingency fund of 10-20% for unexpected expenses.
2. Choose the right builder – Research builders and check references, to ensure they have a track record of completing projects on time and within budget.
3. Consider using a fixed-price contract – Where possible, opt for a fixed-price (rather than a cost-plus) contract to avoid cost blowouts due to material or labour price increases.
4. Make decisions early – Avoid delays by choosing your design preferences, materials and finishes before construction begins.
5. Stick to the plan – Mid-build changes lead to cost and time blowouts, so make your key decisions during the planning stage, not the building stage.

As part of the process, you should secure your finance before the build starts. Speak to me about applying for a construction loan pre-approval, so you know in advance how much you can spend on the project.