Possible Commerce Commission probe into building material suppliers - Kris Faafoi

Commerce and Consumer Affairs Minister Kris Faafoi has signalled the Commerce Commission may investigate if building material suppliers are ripping Kiwis off.

Several reports have found a lack of affordable housing supply is connected to the high cost of building materials, which are more expensive in New Zealand than in countries like Australia.

A 2012 report by the Productivity Commission found that a lack of competition, the small size of the New Zealand market, and high domestic transport costs contributed to Aucklanders paying up to 25 percent more for construction materials than in some Australian cities.

On Friday, Mr Faafoi told The AM Show the market could be investigated under the Commerce Commission's new market study powers, which were introduced in October.

"There are a number of markets in New Zealand where they are saturated, there are very few suppliers for consumers," he said.

"That is why we introduced the market study power for the Commerce Commission."

The powers allow the Commission to look into particular markets to investigate factors that may be affecting competition for goods or services and what could be done to provide consumers with a fairer deal.

Mr Faafoi said it's been suggested to him, including by his colleagues in Government, that the supply of building materials and products should be investigated. He also recognised the lack of competition in New Zealand and the desire to see if Kiwis were paying a fair price.

"Certainly when I put a call out to other ministers about what markets they are concerned about, there were a number that came back and that was one of them," he said.

"I think they are on notice now that the Commerce Commission has got those powers to go and ask those questions and get to the bottom of what the costs are and whether or not consumers are getting a good deal."

But the investigation may not go ahead until a current study into the supply of retail petrol and diesel across New Zealand is completed.

"We can only do about one at a time as it is a new power and they're expensive," said Mr Faafoi.

National party housing spokesperson Judith Collins said her party had been looking into the high costs.

"What we need in New Zealand is we need some competition," said Ms Collins.

"You look at what is stopping that competition coming in, and a lot of it is around regulations, how hard it is to get anything approved."