Build costs for stand alone houses at a record high while construction costs of retirement village units and apartments plummet

Property / news

The average construction cost of new homes is now just under $450,000 - excluding land

26th Feb 25, 10:52am by Greg Ninness

The estimated average cost of building a new home dropped slightly in the fourth quarter of last year.

Based on Statistics NZ's building consent data, Interest.co.nz estimates the average cost of building a new home was $3245 per square metre in the fourth quarter (Q4) last year, giving an average build cost per dwelling of $449,517 (excluding the cost of land).

That was down slightly from a record high of $3285 per square metre in Q3 last year, taking average costs back to more or less where they were at the end of 2023.

However, it's too early to say whether the latest figures are the start of a downward trend, with the figures for all four quarters of last year suggesting costs had flattened out after a period of strong growth.

The figures are contained in interest.co.nz's Residential Building Consent Analysis Tables. These track the quarterly changes in residential construction since 2010.

They show that on a per square metre basis, residential building costs have doubled in the last 11 years.

However, there are major differences depending on the type of home being built.

The average build costs for stand alone houses and townhouses/home units both hit record highs in Q4 last year, while average build costs for apartments and retirement village units dropped significantly.

The average build cost for a stand alone home was a record $3279 per square metre, giving an average overall build cost of $581,528 per dwelling.

Interestingly, while average build costs for stand alone houses have risen sharply over the last 10 years, from $1709 per square metre in Q4 2014, to $3279 in Q4 2024, there has been a steady decline in the average size of the houses being built. They have shrunk form an average 212 square metres to 177 square metres over the same period.

Townhouses and home units showed similar trends, with their average build cost hitting a record high of $3157 per square metre in Q4 2024 following a period of strong growth. Their average size has also been declining (you can see the trends here).

While building costs for houses and townhouses remain on the rise, costs for apartments and retirement units have headed in the opposite direction.

The average build cost for apartments dived sharply to $3364 per square metre in Q4 last year, the lowest it has been since Q3 2021.

Similarly, the average build cost of retirement village units took a significant drop to $3342 per square metre in Q4 last year, the lowest it has been in 12 months.

The numbers above are all national figures, however the same data is available for each of the main urban regions by clicking in the following links for Auckland, Waikato, Bay of Plenty, Wellington Region, Canterbury and Otago.

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82 Comments

by thinktank | 26th Feb 25, 11:03am 1740521032

Yeah why would you.

by Pragmatist | 26th Feb 25, 11:08am 1740521338

Since these are just the average consented costs without hedonic adjustment, are costs actually going down, or are builders/developers just going even more barebones and basic to get the project built and on the market? 1 bathroom instead of 1.5 or 2. Red pen through the ensuite and turn it into a walk in wardrobe instead.

by tothepoint | 26th Feb 25, 2:30pm 1740533406

Nothing like an older dwelling which was well-constructed and has been well-maintained. Especially if it’s in a preferred location.

A lot of new dwellings disappoint on terms of poor quality materials and mediocre finish.

I think the building/construction industry in New Zealand has a lot to answer for. Heaps of new-house owners are suffering financially and emotionally. Disgraceful that such outcomes are so common! 😬

TTP

by Pa1nter | 26th Feb 25, 3:51pm 1740538269

Of only we had more seemingly endless supplies of native hardwoods we didn't even plant ourselves to fell for cheap.

by Small Kev | 26th Feb 25, 3:54pm 1740538472

Totally agree.

Leaky home syndrome 2.0 coming in the next 10 years.

These days, many young contractors have a ‘not my house, not my problem’ attitude. Personally, I’d avoid new houses built after 2015 unless its high-end or done by a reputable NZ builder.

by tis i | 26th Feb 25, 5:59pm 1740545956

Hahaha. Always a good laugh when people claim ‘they just don’t build them like they used to ‘.

Clearly haven’t had to pull many apart.

by Nzdan | 26th Feb 25, 6:30pm 1740547807

As someone who's renovating a 1920's property they definitely don't build them like they used to. Built with solid materials, but you can certainly tell there was a lack of building tech back then.

E.g. A top plate is 50mm out across a 2m opening where we removed the HWC & fireplace/wetback in the kitchen. Knocked part of a wall out up to a king stud, and that's bowed & twisted. Getting some good practice at cutting shims.

by peter.may | 27th Feb 25, 10:26am 1740605179

Same here. The "solidly built" house of the past is a myth

by The_Golem | 27th Feb 25, 9:54am 1740603262

In the words of civil engineer friend: "never, ever buy off the plans"

by Eschaton | 26th Feb 25, 11:23am 1740522196

What a rort, the construction industy needs to sharpen its pencils.

by Pa1nter | 26th Feb 25, 11:43am 1740523420

The costs are imposed by regulation/legislation.

So rather than pricing being set by a tradies ability to get a result as efficiently as possible, they're doing it how a bureaucrat tells them.

We can have all the rules and protections we want. We just have to pay for them.

by nzlegofan | 26th Feb 25, 2:35pm 1740533745

which is why we're building townhouses insulated to suit a North European winter... then wonder why people are spending more on cooling in summer than they ever did on heating in winter... what a regulation failure

by Nzdan | 26th Feb 25, 3:58pm 1740538706

A heat pump consumes less energy to run on cooling mode than heating mode. But you might be right, if they're running the heat pump in the summer but not in the winter.

by fra99le | 26th Feb 25, 7:04pm 1740549865

I run heat pumps to cool my house, which also has solar panels on the roof. It doesn't cost anything as the cooling demand corresponds with the insolation and uses only a fraction of what is being generated. I could open the windows and doors to get cross-breeze and that would definitely work instead, almost every day here. But then the mosquitos would come inside and when the wind gets up things get thrown across the room and doors slam. So solar cooling it is.

by interesting1234 | 27th Feb 25, 10:10am 1740604256

Not sure about that one, my mate who is an electrician advised the opposite, full cooling draws the most power.

by mfd | 26th Feb 25, 5:22pm 1740543771

Insulation done right should help moderate the temperature of the house both in summer and in winter.

The key is 'done right'. I also have friends with townhouses where the upstairs bedrooms are unbearably hot, but this isn't because there's too much insulation.

by fra99le | 26th Feb 25, 6:59pm 1740549546

It's not the insulation that's done wrong, it's the window size and placement vs orientation vs eaves/shading.

by Gold Kiwi | 26th Feb 25, 8:20pm 1740554418

Something I've noticed is most of these new townhouses don't have eaves.

by interesting1234 | 27th Feb 25, 10:11am 1740604314

Must be a market opportunity for awnings to be installed on them.

by Mypointis | 26th Feb 25, 4:00pm 1740538856

Yes, like a relocatable I am just doing, failed because the downpipe clips are more than 1.2 meters apart. They have been like this for 30plus years and suddenly not up to code. The rules are nuts!

by RookieInvestor | 26th Feb 25, 11:26am 1740522401

residential building costs have doubled in the last 11 years.

House prices double every 11 years now.

by J.C. | 26th Feb 25, 1:23pm 1740529421

House prices double every 11 years now.

In the New Testament, you might be right. Ashley Church and Granny will be removing all references to the '7 to 10 year' prophecy where possible.

You can't take people to civil court on this though. Class action is out of the question.

In many ways, it's not constructive when the Ponzi is the be-all-and-end-all of the economy.

by Pa1nter | 26th Feb 25, 1:26pm 1740529619

Except when it's not.

Seems to take up a disproportionate amount of space in your mind though.

by interesting1234 | 26th Feb 25, 1:43pm 1740530633

It has ties to so many things, hard not to be wary of this.

by Pa1nter | 26th Feb 25, 1:48pm 1740530896

People need to live in houses.

It's one of the only large scale manufacturing tasks we still do.

So yeah, there's some deep entrenchments for something core to most people's existence.

But if the property market is sick, and the country experiences single digit GDP drops, fairly safe to say that housing is a part of the economy, but not it's totality, or even close.

by OldSkoolEconomics | 26th Feb 25, 3:17pm 1740536229

Do we know what % of gdp relates to res. housing tho.

My guess is at least 25-30% if we account for construction, RE, mortgage and insurance services, tradies, architecture (prob in tech services), infrastructure and mortgages.

Now isn't a significant portion of gdp also government spend - I think nearly 40% in nz

If so.. residential is really accounting for 50% of non government gdp. Which is a very scary proportion. As that impact tax take... which impacts government spend too.

I am not sure of these numbers but the feel close?

Our exports are pretty much all agricultural.

Even if I am out and res. Property only 15%.. it's still huge when govt spend is removed.

by Pa1nter | 26th Feb 25, 4:17pm 1740539821

You would expect housing to take up a significant percentage of economic activity.

Unless we all lived in tents or something.

by OldSkoolEconomics | 26th Feb 25, 7:22pm 1740550956

Yeah. But the % is quite key, as is if and how it grew to a much bigger % than before and if so in what period of time it happened.

I feel like the increased cost of existjng and new housing combined with other factors (emmigration, immigration, recent historical ocr settings, lack of a cgt etc).. is is going to drag the gdp down for far longer than it should and far lower than was ever needed... and we don't have another industry that could hope to offset it.

by J.C. | 26th Feb 25, 3:15pm 1740536147

Don't think you understand why the Ponzi is the be-all-and-end-all P.

by Pa1nter | 26th Feb 25, 3:52pm 1740538345

Yes. It is really hard to transcribe all your views into something related to the real world.

by IT GUY | 26th Feb 25, 8:48pm 1740556102

China is really good at manufacturing but look at what there ponzi is doing to them

we do not have manufacturing to fall back on.

by HouseMouse | 26th Feb 25, 11:45am 1740523544

The build costs are often manipulated, especially in higher density development, to reduce consenting charges. Given things are so tough, developers will be doing all they can to get things to stack up.

by BigDaddy | 26th Feb 25, 11:48am 1740523708

If you don’t bring in the cost of the land, and all the associated costs, your assumptions are meaningless.

Houses and apartments or not built in the air. The only way to gauge price variations up or down is to bring in all costs, land, infrastructure, type of structure, materials, etc and in particular whether the quality is high medium or low. Just look at the dog boxes the Du Val group built by the hundred. Should you include these into the system to squeeze the results one way or the other?

by Timutei | 26th Feb 25, 11:54am 1740524081

Agreed.

Averages are useless for measuring a diverse construction and property environment.

I've never seen a breakdown of what components comprise the highest costs and how they have increased over time.

The regulations haven't changed that much over the last decade but the costs have rocketed.

Does the data not exist or is it being obfuscated as the industry doesn't want to be exposed? Understanding it would inform changes to regulations.

by peter.may | 26th Feb 25, 1:13pm 1740528838

Recent regulations have in fact had a significant effect on cost -geotech, foundations & insulation high among those!

by Timutei | 26th Feb 25, 4:08pm 1740539281

Do you have figures?

by EpsomArtsandCrafts | 26th Feb 25, 11:52am 1740523963

Australia only costs $2200 per sqm - just saying

by Pragmatist | 26th Feb 25, 2:02pm 1740531752

So where is the rorting in NZ? Is it labour costs, materials, or council/regulatory? Or all three?

by Pa1nter | 26th Feb 25, 2:05pm 1740531902

Labour is more in Aussie

Materials slightly cheaper

The fact Australia isn't sitting on a couple of tectonic plates might have a bit to do with it. And a less variable climates, in areas.

by starrider | 26th Feb 25, 3:02pm 1740535338

The rorting sits with the trades and the councils. Trades have been making out like bandits, this is now winding down thankfully, not providing any costing prior to starting work. Using apprentices for the bulk of the work yet charging top rate for labour. Marking up materials by 50% to 100%.

Obviously this is not true for every trade. But few could resist the easy money being splashed around 2019-2023.

The middlemen (bunnings, mitre10, carters, placemakers etc) are making massive outsized profits on NZ made lumber. During the border lock down it was cheaper to buy a container full of NZ Red Stag framing lumber FROM Aussie, incl shipping, than from any of the local NZ suppliers.

All you need to do is look at the $100k+ vehicles that anyone in the building industry drives around.

There are two suppliers in my area that will not provide a labour and materials breakdown of their quotes or invoices. They have now been blacklisted, as we found they were adding a 30% markup on each job simply because they can.

by Pa1nter | 26th Feb 25, 3:55pm 1740538547

But few could resist the easy money being splashed around 2019-2023.

That was actually one of the hardest periods for trades firms to turn a profit in decades.

- Time-frames out the window (stuff takes twice as long to do - your cashflow is screwed)

- Supplies constantly increasing in price

- Labour scarce and increasing in price

But you keep shaking your fists.

by Final Account | 26th Feb 25, 3:39pm 1740537565

LAND & COMPLIANCE.

You know how houses look more and more cheap and nasty and have more issues as time goes by? That's because the same pot of money has a smaller portion to attribute to labour and materials, as land and compliance costs go up. What's ironic is more compliance and design requirements and regulations are brought in, in an attempt to mitigate the deteriorating building quality, however this only exacerbates the problem, as more money is funneled into stuff that isn't the actual building.

by Mystery | 26th Feb 25, 11:08pm 1740564512

"Australia only costs $2200 per sqm - just saying"

Maybe if you use a volume builder you can get costs down to $2200 psqm in Aus. Otherwise here are the figures for Australia (and in AUD, don't forget, so higher in NZD):

Volume builders charge between 2,000 to 2,500 per m2
Custom builders charge between 2,500 to 4,500 per m2
Architectural build costs between 4,500 to 7,000 per m2.

by Pragmatist | 26th Feb 25, 11:00pm 1740564034

Source?

by Mystery | 26th Feb 25, 11:04pm 1740564242

https://www.buildtogetherpm.com.au/building-blog/how-much-does-it-cost-…

by peter.may | 27th Feb 25, 10:34am 1740605646

Thanks for that - puts another fable to rest!

by Averageman | 26th Feb 25, 11:55am 1740524101

People can only afford so much. In a recession this is magnified. Cost of structure is hard to suppress so land prices is the only thing that can flex to make a project stack up for occupation or sale.

Land bankers enjoy.

by IT GUY | 26th Feb 25, 12:08pm 1740524880

normally the market goes through a phase of lower construction as banked land from lower prices is consumed, but now its banked land from way higher prices, these guys are now in a hopeless situation. they thought they could build out of their situation, but are now trapped... more dollars will equal more losses.

I know of a spec dev who is losing 90k a year in interest sitting on 800 sq m, they could sell now and probably lose 1-1.2 mil or come to the realistaion in 5 years, by which time they will have dropped 450k in interest and still probably another 1mil on land drop

the penny is dropping as fast as land is falling. 4k a sq m at peak to 2k a sq m now to 1.? at the bottom?

BONZAI - place your bets

by WestieAJ | 26th Feb 25, 12:20pm 1740525636

Borrow money to purchase existence as a slave in Zealand. To be somebodies

1. Exploited Worker

2. Tenant

3. Customer/Consumer of monopoly priced goods and services.

Q. Will I ever have a chance to get ahead and participate in wealth creation for myself. Like buy a house?

A. You must be joking. Even people born here have figured out the dealer is crooked and are taking their business to the casino to the west.

OK no thanks. I will see if I can find a better option.

by OldSkoolEconomics | 26th Feb 25, 7:24pm 1740551082

Yeah. Game is up in nz. Economy is weak and no light at end of the tunnel.

by hamishk1 | 26th Feb 25, 12:37pm 1740526674

That's some pretty dire talk there. Have you got actual evidence of this or are you a fan of hype?

by IT GUY | 26th Feb 25, 12:46pm 1740527188

Not interesting in doxing the bag holder, you can choose to believe me or not....

Some who paid 4k a sq m at the top are in serious trouble here, especially as the demand for the type of build they planned is low. There are already to many of these townhouses on the market with no buyers... NO ONE is going to fund the build to get them out of the shite. They would have planned for high end townhouses (4 on 800 sq m ) , but now in that suburb you can buy an entire 800 s m site for 1.6mil.

take a look around, many tried to get council approval for there plans and then sell... but there are no dev buyers keen at all.

by hamishk1 | 26th Feb 25, 1:28pm 1740529700

OK, so the odd developer in Auckland is holding on to some excess land inventory, but surely this is the result of the high interest rates we've seen during the last couple of years right? Now that interest rates are heading south, many of these developers will see more demand, and at the very least get (most) of their money back.

by Pragmatist | 26th Feb 25, 2:05pm 1740531954

I think it's going to be a while before there is any excess demand for new build shitbox townhouses, there are plenty out there already.

They would need to have something special to differentiate them from existing stock, like a good location, or superior design/build quality.

by HouseMouse | 26th Feb 25, 2:18pm 1740532712

Exactly

by IT GUY | 26th Feb 25, 8:55pm 1740556536

at the very least get (most) of their money back.

no they will be bankrupted so others get there money back, watch and learn how ruthless bankers can be

by Stu Smith | 26th Feb 25, 12:13pm 1740525226

I confirm these stats. Two houses, same size, adjacent, one built 9 years ago, the second about to be completed. Cost is 2.5 times. Causes, grossly over engineered - there is no incentive for design to be cost effective and the cost of building materials. One answer - all property prices need to come down significantly and construction would stop until it is cost effective to start to build again vs buying what already built

by Pa1nter | 26th Feb 25, 12:45pm 1740527115

Last year I worked on a build that was the identical architectural design to one next door built 4 years prior. The price had doubled (but so had the build time, due to new regs).

The engineering was dictated by new regs.

by OldSkoolEconomics | 26th Feb 25, 7:25pm 1740551154

Regs crept up in a labour governed excess boom. Gonna be hard to turn regs off now.

by Rampart | 26th Feb 25, 1:27pm 1740529676

I hear ya with the over engineering. I install air conditioning for a living. These days I struggle to fit a basic size ducted unit in a roof cavity due to there being a truss every 800mm! Way over the top.

by Tui12 | 26th Feb 25, 1:52pm 1740531134

How good is ducted. We’ve had it installed in 2 houses now. Our current one had to be underfloor though as the roof cavity was too small. Turns and old weatherboard house into pure comfort winter or summer. Dirt cheap to run also. Couldn’t live without one.

by tis i | 26th Feb 25, 6:14pm 1740546867

Who knew central heating was so good huh?

Anyway, ‘grossly over engineered is a great description for it. Literally out of space on the timber for anymore brackets.

by Rampart | 26th Feb 25, 7:55pm 1740552944

Yea underfloor ducted is niiiiice. Especially in winter with the heat rising.

by Zwifter | 26th Feb 25, 12:52pm 1740527575

The numbers don't line up, I couldn't get a 200sqm stand alone two storey house built in Auckland for $500K in 2017. Would have needed at least $600K, now you say the cost has basically doubled ? That or the quote back then was way over the top.

by lsyxmboy | 26th Feb 25, 12:58pm 1740527919

APARTMENT at $3364 per square metre? Who can do it, I'll pay! Our 8 storey entry-level apartment cost sets at 6500-7000 per square metre and this exclude development cost on consultancy,contribution

by HouseMouse | 26th Feb 25, 1:59pm 1740531579

As above, the numbers are BS

by peter.may | 26th Feb 25, 1:10pm 1740528651

I would like to see the costs of single level versus multi level split up. I have been in the residential building industry for over 4 years - & our stand-alone complet dwelling at 190m2 comes out at $2,578.00inc gst per m2. That cost includes floor covering & al allowance for exterior concrete drive/path/patio.

by Robber Baron | 26th Feb 25, 1:14pm 1740528892

Why costs are high...Go to build new house. Geotech report says 4.5m deep piles required. Engineer and Geotech have argument. Geotech now says 2.8m probably OK. Builder digs 2.5m hole. Geotech signs it off. 6 months later see neighbour doing 600mm shallow footings next door.

by IT GUY | 26th Feb 25, 8:59pm 1740556780

My god I saw same thing around 2020, two houses almost right next to each other, surely common ground could be sensible.

by peter.may | 26th Feb 25, 1:16pm 1740528970

I have been in the residential building industry for over 40 years. I would like to see the costs split to show the cost difference between single level & multi level construction.

Our standard 190m2 stand-alone house, with floor coverings, costs $2,578.00 m2

by BigDaddy | 26th Feb 25, 2:13pm 1740532381

I suggest you add 15% GST to your figure as all new builds must pay it.

That takes it to over $3000 m2 which is much closer to the figure in the article.

by peter.may | 27th Feb 25, 10:38am 1740605906

My cost at $2,570.0m2 includes GST

by Final Account | 27th Feb 25, 11:46am 1740610007

What region are you located in?

by Average Kiwi | 26th Feb 25, 2:20pm 1740532804

Hi Greg, Are these costs GST Inclusive?

I suspect the Apartment costs are well under cooked. This is probably this is well over $6K per M.

It is really interesting seeing the Retirement Village Operators wearing the brunt of this.

- Uneconomic to build on some sites / configurations

- Retirees house prices down / Poor Sales

- Operational Costs up

- Large Capital raises without any meaningful improvement in financial performance.

by WellingtonInvestor | 26th Feb 25, 2:41pm 1740534116

I don't know about Rs prices, but another retirement group raised their prices a lot when the house price bubble occurred, and they have never dropped them when house prices crashed. So people selling can't get what they need to buy into a retirement unit, and also have some cash left over. So I know some people who are just staying put or buying a standalone small house outside a complex which are cheaper, and they actually own them.

by Dale Smith | 26th Feb 25, 3:05pm 1740535552

Do these building costs include council DC levies and other increased costs due to bureaucracy?

by OldSkoolEconomics | 26th Feb 25, 3:21pm 1740536509

We are only building houses for loweskilled immigrants anyway.. as skilled kiwis are leaving.

So we could just stop building houses, stop immigration and over a 20 year period nz would be better off overall. With a better standard of living.

Cost of building would fall. Builders and developers would leave or retool. Economy would reset. All would be good after a year or two of chaos.

by Property Leader | 26th Feb 25, 3:34pm 1740537281

My new build completed 18 months ago (second dwelling on one site) cost me $10833 / sq m.

Nothing really fancy but we are pleased despite the completed cost being double original estimate.

by Yvil | 26th Feb 25, 5:25pm 1740543950

It sounds like you are easily pleased if you're OK with a 100% budget blowout.

by tis i | 26th Feb 25, 6:18pm 1740547129

And you call yourself property leader?

by OldSkoolEconomics | 26th Feb 25, 7:28pm 1740551308

Wow. How on earth did it cost double the original estimate?

Did the original scope change? Or the costs changed by 100%? If it was the costs.. I would hire a lawyer.

by The_Golem | 27th Feb 25, 10:03am 1740603800

Is government actually likely to ever do anything about the state of our building market's material supply oligopoly? Or liability laws that lead to over-regulation aimed at mitigating government liability rather than facilitating building? Or the horribly productivity? Or the hostility of regulatory bodies and industry to innovation? Or agenda and special interest driven local planning? Or...

On previous performance: hard no. What are our elected representatives actually doing to make the biggest industry work better?