Phil Twyford promises crackdown on building materials costs

The Government is committing to putting the cost of building materials under the microscope.

Housing Minister Phil Twyford has promised to do it "as soon" as the Commerce Commission has stronger powers.

He told the AM Show on Friday the industry is far too uncompetitive, and he wants to take action.

"I'll be lining up behind Megan Woods to get a market study done on the building supplies market," he says.

"It is rife with rorts and anti-competitive practises."

The cost of building materials is driving up housing prices, and contributing to the housing shortfall. A 2015 Newshub investigation found the industry filled with anti-competitive behaviour.

"We've seen contracts that give the house-building company cash for marketing and promotion and big discounts," Newshub journalist Michael Morrah wrote.

"But in exchange, the contract states the builder must remain loyal to a certain product, and if any prospective buyers ask you have to promote their brand and no other.

Mr Twyford has also previously blamed the high costs on "deals, rebates and incentives for the retailers".

"Kiwis are paying 30 percent more than Australians for the same building materials," he told The AM Show today.

"It's one of the reasons why build costs are so high in this country."

National's Housing and Urban Development spokesperson Judith Collins agrees with him, saying Kiwis are being treated unfairly by the market leaders.

"We are often treated - I think - by some of these bigger companies, multi-nationals, Australian companies, others like the poor cousin," she says.

"I think you've just gotta have a look at this."

However the CEO of the Building Industry Federation, Bruce Kohn, says Mr Twyford's claims are an "exaggeration".

"The sector is in fact one of the most competitive in the New Zealand business environment with participants under ever increasing pressure from imported products and materials from Asian countries, China in particular," he says.

"Margins in most areas of supply are tight. Any microscopic investigation of the situation within the supply chain is more likely to show up extreme concern about the entry of noncompliant products from offshore than pricing practices reflective of rorts and anti-competitive practices."