Residential construction costs are rising at one of the lowest rates on record, according to the Cordell Construction Cost Index, compiled by property data company CoreLogic.
The Index tracks the costs to build a typical new dwelling.*, According to the latest update, overall costs rose just 0.3% in the March 2025 quarter, and just 0.9% over the 12 months to March.
The latest 0.3% cost growth in the first quarter (Q1) this year was half the 0.6% cost growth in Q4 last year, and well below the long-term average cost growth of 1%.per quarter.
The 0.9% cost growth over the 12 months to March this year compares to the peak annual growth rate of 10.4% in calendar year 2022.
"After several years of intense upward pressure, construction costs have now settled into a much slower rate of growth," CoreLogic Chief Property Economist Kelvin Davidson said.
But he warned this was a moderation in price growth, not a retreat.
"Labour doesn't tend to get any cheaper and while materials pricing has flattened out, we are not seeing any decline in the overall costs to build," Davidson said.
The Index recorded the usual mix of price movements, both up and down in Q1, with roof flashings and sheet metal prices rising by 3% to 4%, while structural steel prices nudged up by 1%, kitchen cabinetry costs declined by 2% and PVC plumbing pipes and fittings declined by 3%.
Davidson said the residential construction sector was returning to more normal patterns after several years of disruption.
"The sharp drop off in new dwelling consents and eventual building work over the past 2-3 years has helped take the heat out of costs... with overall consent volumes down around one third below their peak," he said.
"Some builders now have spare capacity, which is helping cap further price rises," he said.
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*Note: The Cordell Construction Cost Index tracks the cost to build a standard, single storey, three bedroom/two bathroom, brick and tile, stand alone house. It monitors the costs of labour, materials, plant hire and subcontracting services.
1 Comments
As a housing website it would be useful if legislation contributing to lower housing costs could be included in some or standalone articles. Don't recall seeing anything recently on interest about this. https://www.legislation.govt.nz/act/public/2025/0019/latest/versions.as… Initiated by Cameron Parker of Act, the only politician who is in the building trade. More articles or referenced in articles on the RMA or Councils inhibiting major building being constructed. Too much on house prices.
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