New Zealand home-building costs picked up in fourth quarter
Construction costs rose 0.9% from the third quarter, when they gained 0.4%
Add BT as a preferred source
[WELLINGTON] New Zealand home-building costs increased the most in 15 months in the fourth quarter as the construction industry begins to recover.
Construction costs rose 0.9 per cent from the third quarter, when they gained 0.4 per cent, property consultancy Cotality said on Wednesday (Jan 14) in Wellington. That’s the most since the third quarter of 2024 but below the long-term quarterly average of 1 per cent.
Falling interest rates and rising business confidence are starting to fan demand for new homes. Building approvals neared a three-year high in the third quarter and that renewed activity is beginning to use up spare capacity in the industry, which can increase the cost of materials and labour.
“We are now seeing a recovery that aligns with anecdotal evidence that builders are becoming busier again,” said Kelvin Davidson, chief property economist at Cotality.
For much of 2025 developers were reluctant to build new properties as there was an over-supply in many areas and prospective buyers – faced with a sluggish economy and rising unemployment – remained on the sidelines. But lower home-loan interest rates have increased the ability for households to finance projects and that suggests the construction industry is set to expand in 2026, Davidson said.
From a year earlier, construction costs increased 2.3 per cent, today’s report showed. That’s a gain from 2 per cent in the third quarter but less than the 4.1 per cent long-term average. Costs rose more than 10 per cent in 2022 when the Covid-19 pandemic drove up wages and key building materials like plasterboard were in short supply.
Navigate Asia in
a new global order
Get the insights delivered to your inbox.
“The latest figures remain relatively controlled, although as the industry starts to recover more clearly in 2026, construction cost growth could pick up again,” he said. “A spike similar to the post-Covid phase remains unlikely.”
The construction cost index is based on the cost of building a 200 square-meter brick and tile house. About half the gauge reflects payments for materials and 40 per cent is labour, with the remainder professional fees and other costs.
A net 7 per cent of firms in the building sector reported increased difficulty in finding skilled workers in the fourth quarter, the New Zealand Institute of Economic Research said, citing its business opinion survey. BLOOMBERG
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Share with us your feedback on BT's products and services
