Rapidly rising building costs have slowed in 2023

Author: fatweb

 
 

The average cost of building a home in Aotearoa New Zealand’s main centres is up 9.5% annually, but price rises have slowed markedly in 2023.

More than 51,000 rates were updated in June, with the average cost of building a standard three-bedroom home increasing by 9.5% in a year, including by 3.8% since QV CostBuilder’s last major update in December.

This compares to a 20.9% annual increase at the same time last year and an 11.3% annual increase to December 2023.

QV CostBuilder quantity surveyor Martin Bisset says, “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. 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.”

However, Martin warned that there was still a great deal of uncertainty in the building industry and economy as a whole, making it difficult to predict exactly how costs will continue to evolve throughout the remainder of the year, 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 lot of economic instability in the domestic construction market.”

The biggest elemental price increase since QV CostBuilder’s December update related to sanitary plumbing, which went up 4.9%. Costs related to interior doors also increased 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 increased by 2.5% since December, with suspended ceilings up 16.2%. Fire proofing (10.1%), metal framing (8.9%), hardware (8.8%) and roof coverings (8.1%) round out the five largest prices increases since the last update.

“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,” Mr Bisset said.

QV 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.

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