Source: Radio New Zealand
Supplied/ Unsplash – Josh Olalde
House building costs are rising at their fastest rate in two‑and‑a‑half years as the recovery in the residential construction sector accelerates.
Cotality, formerly known as CoreLogic, released its latest Cordell Construction Cost Index, which shows residential building costs rose 1 percent in the three months to March, compared with 0.9 percent in the December quarter.
The index is made up of 50 percent materials, 40 percent wage costs, and 10 percent other expenses such as professional fees and consenting.
Annual cost growth rose to 3 percent, but below the long‑term average of 4 percent since 2012.
Cotality chief property economist Kelvin Davidson said the rise in the annual growth rate signals the sector is moving into a more active phase.
“The quarterly figures have been relatively steady, but we’ve recorded a couple of modest increases and the acceleration in the annual rate shows cost growth is starting to find some upward momentum again,” Davidson said.
“That increase reflects a gradual pickup in activity, with more projects progressing, which has placed renewed pressure on parts of the construction cost base.”
He said the period of easing cost growth seen through much of 2024 and 2025 has shifted and is moving back into a growth phase, noting dwelling approvals have reached a two‑year high of around 37,000 as lower interest rates and policy settings improve project feasibility.
Increases were recorded across a range of materials and finishes, including a 12 percent lift in masonry costs, 5 percent for wallpaper and 5 percent for LED lighting, alongside declines in plumbing‑related products such as PVC piping and bathroom fit‑outs.
Davidson said global uncertainty, particularly events in the Middle East and higher fuel prices, are unknowns that could push costs higher as they flow through to freight and materials – something he said there are already anecdotal signs of.
“For the construction industry itself, this will be a challenging period as firms adjust to higher fuel prices just as activity is starting to recover,” he said.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
