Costs stabilise after years of rapid growth
The cost of building a home has remained relatively stable, giving builders and developers greater certainty on price.
QV CostBuilder’s latest August update shows the average cost of constructing a standard one- or two-storey 150–230m² home in the main centres rose just 0.2% over the past three months, following a 0.3% rise in the first half of 2025. This contrasts sharply with the 44% increases recorded between 2020 and 2024.
At the same time, realestate.co.nz data shows upsizing carries steep premiums, with the step from three to four bedrooms adding nearly $400,000 on average. With construction cost growth now subdued, some households may find renovating to add a bedroom a more cost-effective option than buying a larger home.
Annual construction cost growth eases to 1.2%
“Construction cost inflation has remained very subdued this quarter, with annual growth continuing to ease, down slightly to 1.2%, compared to 1.3% last quarter,” said QV CostBuilder quantity surveyor Martin Bisset.
Bisset highlighted key movements this quarter: “The most notable price movements this quarter were Grade 500 reinforcing rods, up nearly 14%, and with the 16mm reinforcing rods rose more than 30% in both Wellington and Dunedin. Other main contributors to the overall cost changes in Q3 were reinforcing mesh, fill material, and insulation.”
Impact of regulatory reforms
Recent reforms could affect building costs over time, including changes to building consents, a shift to proportionate liability, and new rules on overseas products under the Building Product Specifications (BPS).
While intended to improve efficiency, competition, and resilience, Bisset cautioned: “Their success will depend on how well they are implemented and adopted across the industry. QV CostBuilder will track these materials alongside current ones if we can obtain rates from our suppliers.”
On consent processes, QV CostBuilder noted that quicker approvals and earlier start dates should reduce upfront costs, though not the overall cost of a build.
However, Bisset said: “Proportionate liability is harder to assess until details are finalised. If warranties are required, those costs will likely be passed on to developers and homeowners, and history tells us there can be challenges—for example, councils often carried the burden of leaky building claims when builders were no longer in business.”
Industry outlook remains cautious
Bisset said conditions remain subdued in the short term.
“The industry is waiting for the economy to improve before committing to new projects,” the QV leader said. “Government moves to amend the RMA, open the door to overseas materials, and streamline consents are helpful, but restarting stalled projects would also provide much-needed confidence.
“From 2026, stronger growth is expected as major transport, health, and education projects ramp up. For now, cost growth remains in check, providing welcome stability after several turbulent years.”
Non-residential costs also subdued
In the meantime, costs for non-residential buildings (excluding educational buildings) rose 0.2% this quarter, with an annual increase of 1.0%.
“Bear in mind that all of these figures are averages and the true cost of construction will always depend on the level of finishes, internal layout, and all manner of other elements,” Bisset said.
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