This after a dramatic surge during COVID-19
The latest figures from CostBuilder have revealed a slight 0.3% increase in the average cost of building a home in New Zealand’s main centres this quarter, totalling a 5.2% rise since February.
This growth rate is notably less than the sharp increases seen in previous years, suggesting a cooling trend in construction costs.
From rapid inflation to stabilisation
During the peak COVID-19 period, construction costs surged dramatically, with a standard three-bedroom home’s building cost rising by an average of 20.9% in the year ending June 2022, and by 9.5% in the year ending June.
Martin Bisset, a spokesperson for CostBuilder, highlighted the shift towards a downward trend in building cost inflation, attributing it to a more stable international economic outlook and the resolution of pandemic-induced supply chain issues.
Despite the positive trend, Bisset cautioned that economic and political uncertainties, including the Israel-Hamas conflict and unrest in the Red Sea region, could still influence future construction costs.
Detailed rate updates
CostBuilder’s February update saw more than 10,700 rates revised, resulting in approximately 25,000 data changes across six centres. Trade rates slightly decreased by 0.1%, with significant drops in the cost of T&G plywood flooring panels and diesel prices. However, elemental rates experienced a modest average increase of 0.2% since December.
Ceiling finishes rose by 0.7%, structural walls by 0.6%, and exterior walls/finishes by 0.5%.
“There are no significant reasons for these increases, but some are related to a small increase in the labour rate,” Bisset said in a media release. “Fuel costs have come down, inflation is in decline, and increased migration is helping to fill labour shortages, which is helping to keep most costs in check.”
He said these figures represent averages, noting that building costs vary based on finishes, layout, and other factors, such as the presence of a single or double garage.
Powered by Quotable Value (QV), CostBuilder is a subscription-based platform offering detailed building cost information across various New Zealand centres.
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