Awkward tension: House values fall, cost to build increases
New Zealand's construction costs rose by 1.7 percent in the September quarter, driven by higher material and fuel prices. This creates a market tension as the cost to build new homes increases while existing property values decline.
Why it matters
Rising construction costs combined with falling home values create significant economic pressure on the housing market and consumer behavior.
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The cost of building a house increased at the fastest quarterly rate in years in the three months to September, despite the value of existing houses falling .
The latest Cotality Cordell Construction Cost Index shows the cost of building a standard, single-storey, three-bedroom, two-bathroom brick-and-tile house rose 1.7 percent in the September quarter. That was the fastest quarterly rate since 2022. Annual growth lifted to 4.8 percent.
Higher material, freight and fuel costs were adding to the price, and there were warnings that more could be coming in future months.
Cotality said building firms had increasingly little choice but to pass on the cost increases they were experiencing due to the US-Iran conflict , such as fuel surcharges and higher material costs.
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