The average size of new homes may be shrinking but the cost of building them keeps going up.
Ten years ago, in the fourth quarter (Q4) of 2012, the average size of new homes consented in New Zealand was 202 square metres. By Q4 2022 that had shrunk to 141 square metres. That's a 30% reduction over the last decade, according to the the latest building consent figures from Statistics NZ.
However over the same period, the average cost per square metre of building a new home almost doubled, from $1493/square metre in Q4 2012 to $2928/sqm in Q4 2022. (These figures are based on the construction cost estimates at the time a building consent is applied for and exclude non-construction expenses such as the cost of land).
Part of the reason for the reduction in the average size of new homes is the move away from standalone houses and the increasing prevalence of multi-unit developments such as apartments, townhouses and home units.
In Q4 2012 standalone houses accounted for 82% of all new dwelling consents.
By Q4 2022 standalone houses were well in the minority, accounting for 41% of new dwelling consents.
The average size of standalone houses consented at the end of last year was 190 square metres. The average size of townhouses and home units was 108 square metres, with apartments at 93 square metres.
Building costs have soared, but are cost pressures starting to ease?
The increase in build costs that we have witnessed over the last 10 years has occurred across all dwelling types, with smaller dwellings such as apartments showing the biggest cost increases.
In the 10 years from Q4 2012 to Q4 2022, the average, estimated build cost per square metre for new standalone houses has increased by 93%, while townhouses and home units are up by 92%, while retirement village unit build costs are up by 161% and apartments up by 149%.
However those cost pressures may be starting to ease.
The graph below show the average build cost per square metre for all new dwellings consented between Q4 2012 and Q4 2022.
It shows particularly strong increases in costs over the 12 months from Q3 2021 to Q3 2022 but then a flattening off at the end of last year.
Whether that is part of a longer term trend is too early to say, but it may be a sign that the spectacular increases in residential building costs that have occurred over the last few years may be coming to an end.
A detailed national and regional analysis of building consent figures, including quarterly changes in the average size and average build cost by dwelling type, is available on our Residential Building Consent Analysis page.
A similar analysis for commercial buildings (factories, warehouses, office and retail premises) is available on our Commercial Building Consent Analysis page.
The comment stream on this story is now closed.
- You can have articles like this delivered directly to your inbox via our free Property Newsletter. We send it out 3-5 times a week with all of our property-related news, including auction results, interest rate movements and market commentary and analysis. To start receiving them, register here (it's free) and when approved you can select any of our free email newsletters.