Cost of building a home in NZ continues to rise

Dec 19, 2017 | News

Photo RNZ

QV costbuilder figuresshow the average cost of building a standard 140m², three bedroom, one bathroom home increased by the most in Wellington and Hamilton over the past year, up 2.1% to an average cost of $261,265 in both regions. In comparison, Palmerston North costs increased 1.7% to $257,250; Auckland costs rose 1.6% to $275,625; Dunedin costs increased 1.4% to $255,500; and Christchurch where costs rose by the lowest amount over the past year, 1.3% to $279,125.

QV costbuilder Spokesperson Greg Thompson said, “While building costs continue to rise, they are now rising at a slower rate than earlier this year which is likely caused by a slowing in the Christchurch region.”

“Auckland and Christchurch still remain the most expensive places to build a home out of the six cities measured by QV costbuilder.”

“In terms of the various categories of residential buildings measured, costs have increased the most in the large house category (between 200-600m²) with the price of building a house this size rising 3.2% over the past year and 39.1% since the previous building boom prior to 2007.”

One of the reasons for the increase in construction costs is the continued rise in labour pay rates. The latest Statistics NZ labour indices (September 2017) shows that labour costs have increased over the last year by 1.4% in Canterbury and 2.2% for the rest of New Zealand. This confirms that Canterbury’s rates are slowing from the peak of the reconstruction (4.3% in Mar 2013); whereas the rest of New Zealand has stayed relatively steady, at around 2%, for the last 6 years.

Meanwhile, Statistics NZ building consent data shows the seasonally adjusted number of new dwellings consented fell 2.3% (following a 5.9% rise in August). For houses only, the seasonally adjusted number fell 1.7% (following a 3.1% fall in August).

The trend for the number of new dwellings consented increased, and is at its highest level since early 2004.

The top three regions that consented to the most new homes in the year ending September 2017 were:
• Auckland – 10,317 new homes (up 2.9% from the September 2016 year)
• Canterbury – 5,122 new homes (down 18% as the post-quake rebuild continues to wind down, but still at a historically high level)
• Waikato – 3,596 new homes (up 1.7%)
The buoyancy in the building industry is also shown in the latest labour survey from Statistics NZ, which shows that construction employment increased over the quarter by 12,800 (5.4%), whilst over the past year it increased by 22,300 (9.9%).

However, skill and labour shortages have been identified as the construction sector’s biggest issue with more than 30,000 construction workers required in the next couple years and forecasts push this number to as high as 65,000 over the next five years.

This has resulted in NZ construction companies searching overseas to fill the shortage by launching ‘Look See Build NZ’ ( with the aim to attract 20,000 construction professionals which includes engineers, builders, project managers, quantity surveyors, electricians, plumbers and scaffolders.

“It’s important to remember the average cost of building any home will always be dependent on the level of finishes, internal layout, and whether it has a single or double garage and these figures are averages.”

Also that QV costbuilder figures exclude other costs including:
• The cost of land
• Demolition of existing structures on the site
• Additional costs due to building code changes
• Increased structural requirements and external works such as landscaping, driveways and parking areas
• Utilities such as getting power, water, gas, drainage, phone/data mains from public connection to 3 metres from the building
• Balconies and covered ways
• Any loose furniture, fittings and equipment
• Professional, council, and legal fees
QV costbuilder is an arm of state-owned enterprise, Quotable Value (QV) and provides the latest construction cost data to the property and construction industries through an online subscription web platform tool, which can be accessed on any device. Subscribers can access a comprehensive range of building costs associated with the construction of various buildings, including residential and commercial properties.

QV costbuilder tracks the cost of a huge range of residential dwellings including small medium and large sized homes including one storey and two storey homes; multiple unit properties and two or three story townhouses; small apartments, multi-storey apartments and retirement village units and apartments.

QV costbuilder also provides costs on a variety of other buildings including industrial and commercial.

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