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Building cost inflation drops to lowest level in more than four years

June 10, 2024
in Business
Building cost inflation drops to lowest level in more than four years
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Bremner Ridge housing development, Flat Bush, Auckland

Some building products like steel framing are cheaper, but the cost fo fire protection and ceilings is up.
Photo: RNZ / Marika Khabazi

Building cost inflation has slowed to its lowest level in more than four years due to some cheaper material costs, reduced disruptions and a slowing construction sector.

The latest QV CostBuilder showed the costs of building a standard three-bedroom house in the main centres rose 0.3 percent in the latest quarter, with the annual rate slowing to 1.8 percent.

The annual rate to the end of December last year was 4.9 percent and hit a high of nearly 21 percent in 2022.

Read more: Townhouses, new builds: What’s pulling down house prices in Auckland?

Price growth was slowing for a range of economic and industry reasons, QV CostBuilder spokesperson and quantity surveyor Martin Bisset said.

“Significant economic headwinds continue to blow, which has drastically reduced activity across the wider construction sector.

“We’re also seeing that many of the supply chain issues that arose as a result of Covid-19 have now been rectified, with fuel costs and interest rates also sitting relatively steady for the time being.”

Cutting margins

Bisset said the drop in the amount of work available meant builders were having to “put their best price forward” to get work.

Some building products were cheaper, notably steel framing, but there were price rises of 2 percent or more for fire protection and ceilings.

QV CostBuilder is based on the average cost of more than 60,000 construction items in six main centres, and Bisset said the final build cost of a home would depend on other variables, such as the finishes, layout or the size of the garage.

The average cost of building a non-residential building was 0.9 percent higher than a year ago.

Stats NZ data showed the volume of building work put in place in the March quarter fell 4 percent on the previous three months to its lowest level in two years, with a marked fall also in building product and hardware sales.

Bisset said proposed changes to the Building Act to make it simpler and cheaper to build, including easier acceptance of products that comply with specific overseas standards, would take time to come into force and have no price impact in the short term.

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Copyright for syndicated content belongs to the linked Source : RNZ – https://www.rnz.co.nz/news/business/519133/building-cost-inflation-drops-to-lowest-level-in-more-than-four-years

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