The average build cost, excluding land, for a new stand-alone house increased by $75k in the June year

Property / analysis

Cost increases appear to be driving the push to more intensive housing especially in Auckland

8th Aug 22, 12:51pm by Greg Ninness

The latest quarterly building consent figures suggest the number of new homes in the construction pipeline is flattening off after peaking in the third quarter of last year.

According to Statistics NZ, the number of new dwelling consents issued throughout the country peaked at 13,251 in the third-quarter of 2021. Since then it has declined in each subsequent quarter to 12,284 in the June quarter of this year. That's down 1.8% compared to the June quarter of 2021.

So the decline has been more of a gradual easing than a dramatic slide and the figures for the main centres of Auckland, Wellington Region and Canterbury show that new dwelling consents for the second quarter are still running ahead of those for the second quarter of last year. Meanwhile consent numbers in Otago are unchanged from a year ago.

That suggests the biggest falls are occurring in provincial centres.

Underlying the change in the number of new homes being consented is a more dramatic shift in the types of homes being built, particularly in the country's largest housing market, Auckland.

In Auckland far fewer stand-alone houses and apartments are being consented while there has been a dramatic rise in the number of low rise multi-unit dwellings such as terrace houses and home units.

In the second quarter of this year, just 1234 new stand-alone houses were consented in Auckland, down by a third (-34%) compared to the second quarter of last year.

There was an even bigger drop in the number of apartments being consented, with just 532 consented in the second quarter this year, down 43% year-on-year.

Conversely, the number of low rise multi-unit dwellings being consented is through the roof, with 3539 consented in the second quarter, up 55.8% year-on-year.

That means low-to-medium rise multi-unit dwellings such as terrace houses and home units are now the predominant type of new home in Auckland, with nearly three times as many being consented as stand-alone houses.

Overall, 5373 new dwellings were consented in the Auckland region in the second quarter, down 3.1% from its third quarter 2021 peak of 5544 but up 2.5% compared to the second quarter of 2021.

Cost is likely the main driver of the change in the type of new homes being built.

In the second quarter of this year, the national average build cost for stand-alone houses was $538,389, up by $74,971 compared to the second quarter of last year.

For low rise multi-unit dwellings such as terrace houses the national average build cost in the second quarter was $288,544, up by $45,159 compared to the same quarter of last year.

The above figures do not include the cost of land.

A more detailed analysis of building consent trends is available on our Residential Building Consent Analysis page.

This shows the average number of dwellings consented each quarter by dwelling type as well as the average size, average cost per dwelling and average cost per square metre by dwelling types, nationally and for the main regions of Auckland, Waikato, Bay of Plenty, Wellington, Canterbury and Otago.

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22 Comments

by RickStrauss | 8th Aug 22, 12:55pm 1659920155

Heard from an importer of solar panels. He'd increased prices by 13% because "the market expects it". Not because he needed to.

Will be interesting to see how much materials can drop should demand shrink.

by Pa1nter | 8th Aug 22, 1:23pm 1659921785

His costs should be at least 10% higher, if not more.

Anything construction related will have found profits fairly elusive over the past 24 months, it's as least twice as long to get anything done.

by RickStrauss | 8th Aug 22, 1:23pm 1659921792

He'd already raised earlier for that.

by WellingtonInvestor | 9th Aug 22, 1:09am 1659964198

That is the problem, people will just jump on the bandwagon and increase prices because that is what people expect when there is inflation.

by GV 27 | 8th Aug 22, 1:01pm 1659920498

Is this just by dwelling type or can we see the changes in the price of the type of dwellings.

Suspect a three bedroom home is now costing what a four bedroom did three years ago.

by ozzzy2 | 8th Aug 22, 7:26pm 1659943569

On par really, with the rising cost of used houses over the past year.

by JimboJones | 8th Aug 22, 1:58pm 1659923933

I think the cost figures in building consents is utter rubbish. Isn't it just a number you make up when you lodge the consent?

by Final Account | 8th Aug 22, 3:08pm 1659928115

If it is then the $ figures are likely low. No build ever comes in under budget, unless you only build 3 quarters of the building!

Grand Designs oops went over the budget by 50% but never mind we'll sell it for twice that to someone (and every build in NZ is a grand design hah!).

by WellingtonInvestor | 9th Aug 22, 1:13am 1659964383

Don't you pay more for the consent, if you put in a higher number? But the price often put in seem to often be a lot lower than the actual build costs from examples I have seen. BUt you don't know the actual cost until you have a builder, and many people get the consent earlier than that.

by K.W. | 8th Aug 22, 2:07pm 1659924434

Over on Facebook someone posted a quote from Vector to deliver power to a new subdivision of 8 houses. $327,000. Thats $42k per house just to get power to the property.

by Brock Landers | 8th Aug 22, 2:28pm 1659925739

It's reports like these that makes one believe that New Zealand is a lost cause.

by tothepoint | 8th Aug 22, 2:39pm 1659926380

Hi Brock,

You persist in telling everyone how bad you feel about NZ.

Why don't you cut your losses and move somewhere that you like?

TTP

by Brock Landers | 8th Aug 22, 3:02pm 1659927727

Hi Tim The Pricefixer,

I was thinking about moving to Palmerston North. Are there still any leaker penthouse apartments for sale down there for $ROFLMAO?

by MMXXll | 8th Aug 22, 3:55pm 1659930936

Hi Brother Brock.

This is why Tim would like you to be quiet.

"Brooklands Estate is fully consented for 104 sections, and earth worked ready for development. Inground services to be laid on this Autumn, completion anticipated to complete early 2023."

https://landsdale.co.nz/brooklands-estate-hawkes-bay

Prices are Crashing Big Time Already ! Just Imagine what they will be worth in early 2023 when completed.

Tim is nervous the Developer will just sell them himself, and so he should. Tim has a lot to lose.

by Thats All Folks | 8th Aug 22, 3:25pm 1659929135

For those who don’t speak bias, the translation is as follows:

Please Brock, stop providing an honest assessment of property and the current state of the country, I’ve got properties to flog to the remaining sheeple of NZ.

Be Quick!

by Final Account | 8th Aug 22, 3:04pm 1659927854

What a joke. That cost probably included a transformer upgrade for the street though. Still a residential transformer is 'only' around $25-40k.

I imagine there's a shopping list of costs & fees per house (based on there being 8 of) before you even get out of the ground: Architectural Design $20k, Structural (for the steel lintel on the front window) $4k, Geotech $5k, Fire Design $5k, Acoustic $2k, Environmental review $2k, Sewage Connection $6k, Water Supply / Backflow $8k, Power Pillar (Vector cost will only be to boundary) $3k, Vehicle Crossing $6k, etc etc

That's $103k and you haven't even done a site cut or temp works yet! Pure speculation of course.

You need to be earning $200k (each) to build a house or do alterations in NZ.

by HW2 | 8th Aug 22, 5:26pm 1659936411

WEL energy did an upgrade to expand the network that allowed us to connect. They charged a fee for a portion of the cost and not the full amount. Based on making a good return on investment from the extra connections.

by nigelh | 8th Aug 22, 5:44pm 1659937440

The average Joe Blogs has no idea what's involved in getting power to section/s. It wouldn't surprise my if many developers didn't know either. There are ways to ensure competetive pricing but the lines companies will invariably involve a sub-contractor mate.

by Dale Smith | 8th Aug 22, 8:56pm 1659949006

They are now getting closer to that magical crossover number where it is cheaper to go off-grid.

by DTRH | 8th Aug 22, 3:10pm 1659928208

Doesn’t look good for housing market prices dropping fast, no way will new builds be able to tack on price rises.

by Carlos67 | 8th Aug 22, 3:29pm 1659929370

Yep exactly what I said on here months ago, the whole market rises based on the cost of a new build. Also what they are building now is really going to start to distort the average house figures, you cannot compare these rabbit hutches to a stand alone house on a decent bit of land. There is simply no way figures generated are going to be accurate enough to factor in these type of "houses".

by Dale Smith | 8th Aug 22, 8:54pm 1659948883

There is still a nuance that is lacking in many of these articles.

Costs are increasing for two reasons.

1) Restrictions in the system, basically a supply and demand issue, eg Land use policies for the last 3 decades being the largest, but now also joined by material and labour costs accentuated by Covid caused logistic delays and material shortages.

2) Extra regulations cause more materials and therefore added costs, eg extra insulation, earthquake strengthening etc. You put more into a house, naturally, it costs more on a like-for-like basis.

Many of the restrictions we have little control over because they are caused by international issues, BUT many we do, like our land use policies and consenting costs. Fixing these alone would reduce the cost of building a house by approx. 1/3.

And of course, costs are different than price, except as giving an underlying principle that price must as a minimum equal cost, otherwise it won't get built. As costs go up and prices fall, we are getting closer to that break-even point, which will halt the construction of those developments that can be halted. Others that can't be stopped will get built to completion and sold at a loss.