
Residential building cost inflation continues to decline, according to the Cordell Construction Cost Index (produced by Cotality).
The Index tracks the costs involved in building a standard, single story, brick and tile house. The total costs rose 0.4% in the September quarter (Q3), down from a 0.6% increase in the June quarter (Q2).
The latest result was less than half the long-term building cost inflation average of 1.0% per quarter.
Annual building cost inflation over the 12 months to September was 2.0%, also less than half the 4.1% long-term annual average. It was 2.7% in Q2.
Building materials account for the biggest proportion of costs in the Index at 50%, followed by wages at 40% with the remaining 10% coming from professional services and other sundry costs.
While overall building cost inflation was down sharply in Q3, there was significant variation between components, with plumbing costs up 7% and gas-related products up 2%, while bathroom fittings declined by 6%. Roof tile and kitchen joinery costs were unchanged.
Cotality NZ Chief Property Economist Kelvin Davidson said the moderation in building cost inflation reflected a market that had worked through post-Covid bottlenecks and the extreme cost pressures of 2021/22.
"Materials are better supplied, wage growth has steadied and we're seeing more predictability in product pricing," Davidson said.
"Construction costs remain high in dollar terms, but the pace of change is much milder," he said.
"For builders and homeowners alike, that creates greater confidence in quoting, budgeting and delivery," Davidson said.
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