Homebuilding costs remain stable

The cost to build a new home has been increasing more slowly than the national inflation rate, according to the latest QV CostBuilder report, giving builders and developers more certainty after several turbulent years.

QV’s quarterly CostBuilder update for August found that costs rose just 0.2% over the quarter and 1.2% over the year, compared to 44% between 2020 and 2024. This was based on analysing the cost of building a standard one- or two-storey home of between 150 and 230 square metres across Auckland, Hamilton, Palmerston North, Wellington, Christchurch and Dunedin.

QV CostBuilder Quantity Surveyor Martin Bisset said this period of stability was welcome news for builders. “The industry is waiting for the economy to improve before committing to new projects,” he said.

“Government moves to amend the RMA [Resource Management Act], open the door to overseas materials and streamline consents are helpful, but restarting stalled projects would also provide much-needed confidence. From 2026, stronger growth is expected as major transport, health and education projects ramp up. For now, cost growth remains in check, providing welcome stability after several turbulent years.”

Potential impact of regulatory reforms

Mr Bisset said recent regulatory reforms may influence costs in the medium term. These include an overhaul of building consents, the shift to proportionate liability and new rules on overseas products under the Building Product Specifications (BPS).

“Their success will depend on how well they are implemented and adopted across the industry,” he said.

Mr Bisset noted that while more efficient consent processes could reduce upfront costs by allowing projects to start sooner, they were unlikely to reduce overall build costs.

“Proportionate liability is harder to assess until details are finalised,” he said. “If warranties are required, those costs will likely be passed on to developers and homeowners, and history tells us there can be challenges – for example, councils often carried the burden of leaky building claims when builders were no longer in business.”

Planning to build or renovate? Make sure you get finance pre-approval before you start, so you have certainty around your budget. Contact me to discuss your scenario.