Key Facts

  • New home construction in New Zealand is on the decline, with the number of consents issued dropping by 20.6% when compared to last year. The total number of dwellings consented nationwide in the 12 months to October is 39,900, down from 50,252 in the previous year.
  • All dwelling types have seen a decline, led by standalone houses (-26.2%), apartments (-24.6%), townhouses and home units (-16.2%), and retirement village units (-3.1%).
  • The decrease in planned residential construction is reflected across all main centres, with Auckland (-24.1%) being most affected, followed by Hamilton (-12.0%), Tauranga (-21.0%), Wellington City (-4.8%), Christchurch (-16.1%) and Dunedin (-12.2%).
  • Building costs seem to be stabilising, with the average cost of building a standard three-bedroom house in New Zealand increasing by 4.9% over the last year, down from 11.3% and 14.7% in the previous two years.
  • Mixed movements in costs for different materials and building processes are being observed, with costs for framing and substructure reducing due to lower steel costs, but drainage and roofing costs increasing. Reinforcing steel saw the largest price drop at 16.9%, while infrastructure costs rose by 7% and demolition costs by 5.1% due to higher plant hire and tipping fees.

Article Summary

The latest data from Statistics NZ shows a significant drop in the number of new homes entering the construction phase, with a 20.6% decline in consents issued for new dwellings nationwide in comparison to the previous year. This trend is seen with all types of dwellings, and major centres such as Auckland, Hamilton, Tauranga, Wellington City, Christchurch, and Dunedin have all been affected by this construction slowdown.

On the other hand, construction costs are showing signs of stabilisation. The QV CostBuilder database shows that the average cost increase for building a standard three-bedroom home in New Zealand was 4.9% over the last year. This is much lower than the 11.3% and 14.7% increases experienced in the previous two years.

There are, however, some fluctuations in costs for different materials and building processes. While costs for framing and substructure have fallen due to lower steel prices, drainage and roofing costs have risen. The most significant price change was observed in reinforcing steel, which saw a price drop of 16.9% primarily due to favourable exchange rates. Infrastructure and demolition costs have risen due to higher plant hire and tipping fees.

The stabilisation of building costs is attributed to multiple factors including an improved economic outlook internationally, easing global supply chain issues following the Covid-19 pandemic, and increased migration helping to fill labour shortages.

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