Latest news with #buildingCosts
RNZ News
08-07-2025
- Business
- RNZ News
House building costs rise at strongest rate in nearly two years, Cotality index shows
EMBARGOED UNTIL 0001 WEDS JULY 09 House building costs have risen at their strongest rate in nearly two years, according to Cotality's Cordell Construction Cost Index. Photo: RNZ House building costs have risen at their strongest rate in nearly two years, suggesting the slowdown in cost growth has reached the bottom. Cotality's Cordell Construction Cost Index showed a growth rate of 0.6 percent for the three months ended June, for an annual rate of 2.7 percent, the strongest since the third quarter of 2023. Chief property economist Kelvin Davidson said the increase was partly a reflection of the removal of a 1.1 percent fall a year ago and might not signal a return of price pressures. "Although the annual growth rate has nudged higher, it's important to recognise this is more about base effects than any significant reacceleration." Cotality chief property economist Kelvin Davidson. Photo: SUPPLIED At the peak of the pandemic building costs surged 10.4 percent, and the long term average was 4.2 percent, but Davidson said the sector had seen increased spare capacity as the number of houses being built has fallen sharply . "That decline has taken the heat off both wages - which account for around 40 percent of the index - and material costs, which represent roughly 50 percent." The index is based on the cost of building a standard single storey three bedroom house, with two bathrooms in brick and tile. The report showed varying price moves among key materials with weatherboard 6 percent higher but decking timber and ceiling batts 1 percent cheaper. "Cost movements are now being driven by specific supply and demand dynamics rather than broad-based inflation," Davidson said. However, he said building costs remained high even if the growth was contained. "Households can be more confident costs won't run away during a project, but the total cost to build remains a hurdle. With ample existing stock on the market, builders may still face challenges attracting new projects in the short term." Davidson expected a gradual pick up in the construction sector with population growth, easing interest rates and the loan-to-value and debt-to-income lending restrictions favouring new builds. "Cost growth may well have bottomed out, with some renewed upward pressure possible in 2026. But a return to the double-digit growth rates of 2022 seems unlikely." Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
News.com.au
02-06-2025
- Business
- News.com.au
What to do when your new home gets too expensive to build
Isaac Morrow-Jones and Rubin Steyn partnered up on their first home development together – and they managed to pull it off amid spiking build prices across the state. Both lived in Wavell Heights and saw the suburb as a growing market, and decided it was time to jump into their dream of developing a house. 'For us personally, it was always a conversation about wanting to do developments together,' Mr Morrow-Jones, 26, said. 'I know that sometimes things don't go the way that they need to go, so I think I was prepared for the whole project from the start … now, we've actually brought it to fruition.' One of the biggest problems for building in 2025 was the cost. Housing Industry Association data has shown building material prices are at 35.4 per cent above pre-pandemic levels, with building and renovation costs spiking with it. In 2025, it is 34.4 per cent more expensive for those looking to build a home compared to late 2019, and renovation costs have surged even higher with a 43 per cent jump. Mr Morrow-Jones previously worked in the construction industry, and said he saw things get harder for everyone in that profession over the past five years. 'After Covid, there were a lot of companies out there that were struggling from the price increase, especially because there were locked in contracts with developers,' he said. 'Ultimately, a lot of projects that were priced pre-Covid were now in the red.' When building his house, Mr Morrow-Jones found builders to have accounted for these new price increases in the contract, which also included an uptick in labour costs. He added that to help keep those prices down, he and Mr Steyn needed to make sure the materials they'd be using were readily available, avoiding the risk of further expense. 'What we selected at the start of the project, we knew 100 per cent that it was going to be available,' he said. 'That's a massive part of the cost.' The two business partners are now selling their completed build at 2 Taabinga St, Wavell Heights, with Place Ascot. Place Ascot Director Drew Davies said rising build costs meant those looking to make a home from scratch might have to think harder about if they should – but added it was a good opportunity for developers. 'It depends if you've got a burning desire, and the capacity to do it yourself,' he said. 'There's a super strong demand for finished product at the moment.' 'When you buy a finished product, the price is the price … you avoid those budget blowouts [with] a build.'
