Source: Quotable Value (QV)
Building costs have increased at an average rate of 44% over the last four years, despite the rate of inflation slowing markedly last year.
This was the major finding from a new QV CostBuilder study that looked at the comparative cost of building a standardised 150m² home across six main urban centres – Auckland, Wellington, Christchurch, Dunedin, Hamilton and Palmerston North.
This bespoke research also showed that construction costs have increased by the largest percentage in Dunedin (47.1%) since 2020, followed by Palmerston North (46%).
Despite always being the most expensive city to build a home in overall, construction costs actually increased by the smallest margin in Auckland (39.4%). Christchurch (40.5%) wasn’t far behind, with Hamilton (44.8%) sitting just above average.
In real dollar terms, however, Wellington saw the largest average increase in the cost to build a home; its average build cost increased by $900 per square metre in five years. As a percentage, the cost of building a home in the capital increased by an average of 45.9% since 2020.
But the good news for developers or for anyone looking at building a home is that the rate of building cost inflation has slowed markedly in recent years. In 2024, costs increased at a rate of between 0.7% and 2.2% across these six main urban areas.
The smallest percentage increases last year were in Auckland (0.7%) and Hamilton (0.7%). Palmerston North (2.2%) saw the largest increase in 2024.
“There are currently no significant differences in the rate of construction cost increases across the country. What these numbers show is just a relatively small difference in cost, which can be attributed to variable labour rates, different company overheads, some variance in materials, and differing transport costs across the country,” QV CostBuilder quantity surveyor Martin Bisset said.
“After years of pronounced inflation that came as a result of managing the Covid-19 epidemic here and abroad, it’s good to see that construction costs have become significantly more stable in recent years. Hopefully the years of such staggeringly large construction cost increases are now firmly in the rear-view mirror.”
Mr Bisset is currently busy preparing QV CostBuilder’s latest quarterly update for release next month. Though still early in the process, he said it looked as though Q1 in 2025 had been another relatively flat quarter.
However, he also pointed out that ongoing geopolitical instability in Ukraine and the Middle East, the proliferation of US-led trade wars, and increased tariffs on construction materials could all have a major detrimental impact on the cost of building a home in New Zealand in the future.
“Given that Aotearoa relies so heavily on importing building materials, a lot always depends on the buying power of the New Zealand dollar.”
For this research, the standard home was based on three or four bedrooms, with one or two bathrooms. Construction consisted of Ribraft floor slab, Colorsteel® roof, weatherboard or brick veneer cladding, 2.4m high stud, floor tiles to bathrooms and kitchen, half height wall tiles to bathroom, and medium quality fittings.
These rates are based on the total floor area of all levels, measured over all external walls. They include the following percentages, which are based on the total cost of the building – preliminaries at 7%, margin at 5%, and contingency at 1.5%.
Mr Bisset noted these rates exclude the cost of land, demolition of existing structures on site, site works to achieve the starting level of the build, increased structural requirements, external works, utilities (outside the boundary of the site), professional and legal fees, fittings, furniture, or equipment. They also exclude GST.
“It’s important to remember that all of these figures are averages and the cost of building will always depend on the level of finishes, internal layout, and all manner of other elements,” he said.