New Zealand Residential Construction Costs Show Sustained Slowdown in September Quarter

New Zealand Residential Construction Costs Show Sustained Slowdown in September Quarter

New Zealand: New Zealand’s residential construction costs rose only marginally in the September quarter, signalling a continued slowdown as the housing market stabilises and lending conditions ease ahead of 2026. The Cordell Construction Cost Index (CCCI) showed the cost to build a standard single-storey brick and tile home increased 0.4%, down from 0.6% in Q2 and well below the long-term quarterly average of 1%. Annual growth slowed to 2%, compared to 2.7% previously and far below the long-term average of 4.1%. Material costs accounted for about 50% of total costs, wages 40%, and professional and site costs 10%, with mixed Q3 price movements: plumbing rose 7%, gas products 2%, bathroom fittings fell 6%, while roof tiles and kitchen joinery remained flat.

Housing activity remains steady, with annual dwelling consents easing to around 33,500–34,000, down from a peak above 51,000 in the year to May 2022, but still well above historical lows. Construction cost inflation has now run below consumer inflation for several quarters, indicating a more balanced sector. The outlook remains predictable, with moderate increases in costs expected only if demand surges or supply shocks occur, while improved confidence and finance accessibility could gradually lift project starts through 2026. The slowdown reflects better-supplied materials, steadier wage growth, and more predictable project pricing, creating greater confidence for builders and homeowners in budgeting and delivery.

Source: NZ Adviser