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.
36 Comments
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.
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.
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.
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.
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?
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.
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
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.
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.
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.
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.
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
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.
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.
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.
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