The number of new homes in the construction pipeline continues to decline while the cost of building them appears to be stabilising.
The latest figures from Statistics NZ show 39,900 new dwellings were consented nationwide in the 12 months to October, down 20.6% compared to the 50,252 consented in the 12 months to October last year.
The decline affected all dwelling types with the biggest decline for stand alone houses -26.2%, followed by apartments -24.6%, townhouses and home units -16.2%, and retirement village units -3.1%.
The slump in planned residential construction affected all main centres led by Auckland -24.1%, Hamilton -12.0%, Tauranga -21.0%, Wellington City -4.8%, Christchurch -16.1% and Dunedin -12.2%.
While those figures suggest an imminent slowdown in residential construction work, the latest building costs figures from Quotable Value suggest recent cost increases are moderating.
According to the QV CostBuilder database, the average cost of building a standard three bedroom home in New Zealand increased by 4.9% over the year to the end of November. That's down from 11.3% in the year to November 2022, and 14.7% in the year to November 2021.
"Construction costs have all but stabilised throughout the second half of this year. reflecting a somewhat improved economic outlook internationally and an easing in the global supply chain issues that arose throughout the Covid-19 pandemic," CostBuilder spokesperson Martin Bisset said.
Movements in costs were mixed for different materials and building processes, with the costs of framing and substructure down 4% and 2.9% respectively due to reduced steel costs, but drainage and roofing costs up 5% and 2.8% respectively.
The biggest trade price change was for reinforcing steel, which drooped 16.9%, largely due to a more favourable exchange rate, while infrastructure costs were up 7% due to higher plant hire and drainage costs, with demolition costs also up 5.1% due to higher plant hire and tip fees.
"Fuel costs have largely stabilised for the time being, inflation is in slow decline and interest rates are expected to be at or near their peak," Bisset said.
"These factors and others, including increased migration helping to fill labour shortages, are currently keeping rising costs in check," he said.
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