Construction costs have increased at their slowest annual rate since CostBuilder’s inception in 2015, despite a small spike in the last quarter.

The latest QV CostBuilder construction cost update shows the average cost of building a standard one or two-storey 150/230m² home in Auckland, Hamilton, Palmerston North, Wellington, Christchurch or Dunedin has risen by just 1.5% in the 12 months to the end of November 2024.

That figure is less than a third as much as the average increase recorded in the year prior.

For comparison, construction residential costs grew by an average of 5.6% in the year to November 2023, as well as by 11.3% and 18.9% over the same 12-month period in 2022 and 2021 respectively.

The previous lowest annual increase was 1.6% for the 12-month period to November 2020.

Overall residential construction costs have increased by an average of 0.6% this quarter alone – compared to an average increase of 0.3% in the February, May, and August quarters – but this was also a comparatively smaller rate of growth than in recent years.

“After four years of pronounced volatility, construction costs have been significantly more stable in 2024,” said QV CostBuilder quantity surveyor Martin Bisset.

“This is reflective of inflationary pressures continuing to ease at home and abroad.

“Many of the catalysts behind the rapid residential construction cost growth we saw throughout the early years of the pandemic are now no longer a major factor. Record low interest rates are long gone, house prices have generally been on the wane for some time, supply chains have been re-established, and population growth has slowed.

“Although these are undoubtedly tough times for the residential construction industry as a whole, with demand dropping precipitously in recent years, interest rates are on their way back down again now and construction costs are largely stable. This could well pave the way for increased optimism in 2025.”

Meanwhile, he said the average building cost per square metre for non-residential buildings (excluding educational buildings) had increased by 1.4% in the year ending November 2024, including by 0.7% this quarter.

“It’s important to remember that all of these figures are averages and the cost of building will always depend on the level of finishes, internal layout, and all manner of other elements.

“For example, whether or not a home has a single or double garage will obviously have a significant impact on its cost of construction.”

QV CostBuilder is an online subscription-based building cost platform.

It covers everything from the building costs per square metre for warehouses, schools and office buildings, to the approximate retail supply cost of GIB and more than 8000 other items, plus labour rates, labour constants and more.

In this latest monthly update, about 23,100 current material and labour prices were applied to QV CostBuilder’s comprehensive construction cost database of more than 60,000 rates across six main centres: Auckland, Hamilton, Palmerston North, Wellington, Christchurch and Dunedin.

Cost planning rates increased by an average of 0.3% in November, with site preparation costs falling 1.2% due to the reduced cost of steel sheet piling rates.

Framing costs also reduced by 0.7%, while exterior walls, wall and ceiling finishes all increased at an average rate of between 0.8% and 1.2%.

The cost of structural steel reduced by 1.7% last month, but steel framing increased by an average of 4.7%.

Suspended ceiling costs also grew by an average of 5% due to an increase in panels and grids systems.

Visit QV CostBuilder at costbuilder.qv.co.nz.