Despite sky-high inflation and a year of supply chain issues, construction cost increases appear to finally be slowing according to Quotable Value (QV).
The latest QV CostBuilder data, released on Monday, shows the average cost of building a house in a main city increased by 11.3 percent in the past year. While that might sound high, it's down from a whopping 20.9 percent annual increase in QV's May 2022 update.
QV CostBuilder is New Zealand's most comprehensive construction cost database. In its price update in December, more than 51,500 rates were updated, resulting in an 11.3 percent yearly increase in the cost to build a standard three-bedroom home.
QV CostBuilder spokesperson and quantity surveyor Martin Bisset said rapidly rising construction costs appear to be finally levelling off - but we're not out of the woods yet.
"At double-digit growth over the past year, we've obviously still got a long way to go before we get back to the stable price increases we saw pre-pandemic," Bisset said.
"In the meantime, supply chain issues are reducing, but is still likely to be an issue with products from China, which still has strict COVID-19 policies in place."
"Inflation also remains rife, both at home and abroad, with all associated costs from rising interest rates likely to continue to be passed on to consumers. Prices are likely to continue to rise as a result, albeit not at the rapid rates we've seen over the last couple of years."
The biggest driver of cost increases since May related to framing which rose 9.5 percent due to rising prices for precast concrete, reinforcing and structural steel. Costs related to exterior walls and exterior finish also increased, up 7.7 percent, and the cost of upper floors and stairs and balustrades went up 7.4 percent and 6 percent respectively.
On average, each trade rate has increased by 4.6 percent since May 2022, with drainage up 9.2 percent. The cost of fireproofing increased by an average of 8.9 percent, with plasterboard linings (8.6 percent), carpentry (8.4 percent) and hardware (7.8 percent) rounding out the top five price increases since May.
This represents a 3.9 percent increase in the price to build non-residential buildings and a 5.5 percent increase in the cost to build residential buildings since May. The average price of building a non-residential building increased by 8.9 percent year-on-year.
"It's important to remember these figures are averages and the cost of building will always be dependent on the level of finishes, internal layout, and all manner of other elements, including whether or not it has a single or double garage," Bisset said.
It comes after the cost of building a house skyrocketed during the pandemic driven by massive demand and supply chain issues.
House prices also leapt up but have been steadily falling since their peak at $1,063,765 last January.
