The cost of building a new house in New Zealand is increasing at its fastest rate on record due to material and labour shortages.
Property research firm Core Logic’s Cordell Construction Cost Index (CCCI), which measures the cost of building a standard three-bedroom house, rose by a record 2.6 per cent in the three months ending June. The annual growth rate also hit an all-time high of 7.7 per cent, beating the previous record set in the first three months of the year.
“This is the swiftest rise in the NZ CCCI we’ve seen in a decade, and I don’t expect these price pressures to ease for at least another couple of quarters, given ongoing materials shortages and labour pressures,” CoreLogic chief property economist Kelvin Davidson said.
CoreLogic construction cost estimation manager John Bennett said that cost growth was seen across a range of trade categories and products.
“Imported products, particularly metal-based items and tiles are rising, as well as cost hikes from consultancies, affecting preliminary costs.
“It is important to note that other pressures are at play on the industry, with labour availability and overheads impacting costs.”
Davidson said that it would not be a surprise if the CCCI recorded double-digit growth before cost pressures began to ease in 2023.
