Construction costs flatten out as weak demand keeps a lid on prices, QV says

Residential and commercial construction costs remained largely flat at the start of this year, according to QV's Costbuilder database.

Costbuilder tracks more than 60,000 construction costs including the prices of 11,500 building materials, and uses that data to estimate the cost of building a standard three bedroom house in six centres - Auckland, Hamilton, Palmerston North, Wellington, Christchurch and Dunedin.

It found that the average construction costs increased by just 0.4% over the three months from December 2024 to February 2025, and the annual rate of increase was just 1.5%.

"Construction costs continue to flatten out for the most part, weighed down by challenging economic conditions and reduced demand as a result," QV Costbuilder quantity surveyor Martin Bisset said.

"We all remember the Gib crisis three years ago," Bisset said.

"Fortunately we're not having any of these sorts of issues today."

"Global supply chains are now operating more or less as they should be and demand for materials has dropped dramatically.

"This is helping to keep a lid on prices," he said.

A similar trend was evident in non-residential construction costs, which had even lower inflationary pressure than residential building work.

Non-residential building costs increased by just 0.1% in the three months to the end of February and were up just 1.2% over the 12 months to February.

However Bisset warned geopolitical uncertainties had the potential to push up costs.

"There continues to be high levels of tension and uncertainty in international relations right now, with armed conflicts, trade wars and a general sense of political volatility posing a risk not only to construction costs but also to the economy as a whole," he said.

"Anything that impedes the flow of goods across the world has the potential for increasing the difficulty and therefore the cost of acquiring building materials here,"  Bisset said.