Build costs rise as materials offset fuel relief

Residential construction costs continue to edge higher even as fuel prices ease. New Stats NZ data shows petrol prices fell 3.8% in May, while diesel dropped 11.4%, in line with short-term eases in global fuel pressure after a volatile start to the year. This movement will be welcome news for transport-heavy industries but the reduction isn’t enough to shift the broader trajectory of construction costs.

QV CostBuilder data shows the average residential building cost per square metre increased by 1.6% in the three months to the end of May 2026, and 2.4% over the past year. The data suggests that while some input costs are stabilising, overall pressure remains firmly to the upside. 

“The reduction in diesel prices has provided some much-needed relief for fuel-intensive areas of work, but it hasn’t been enough to stop residential construction costs from rising overall,” QV CostBuilder spokesperson and quantity surveyor Martin Bisset said. 

“The steep price of fuel has obviously been the most pressing issue in recent months. We’ve seen some of that pressure ease now, but diesel is still significantly higher than it was earlier this year and so it remains highly relevant and highly volatile.”

Lower diesel prices did contribute to short-term easing in some early-stage construction activities. Excavation costs fell 5.1% over the month, while piling work declined 0.9%. But these savings remain isolated rather than widespread across the sector.

“The broader picture is still one of modest cost growth overall. Some costs have come back, but materials such as concrete, timber, cladding and pipework are still moving higher,” Bisset said. 

“Construction cost inflation is not running away right now, but it is still present. Anyone planning a build should allow for some movement in costs. Even modest increases can make a difference over the life of a project.” 

At the same time, building material prices continue to move higher across a wide range of categories, reinforcing underlying cost pressure in the sector. Increases were recorded in garage doors (2.5%), framing timber (3%), ready mix concrete (4.1%) and fibre cement cladding (4.8%), alongside sharper rises in cedar cladding (21%) and key infrastructure materials including PVC pressure pipework (18.8%), PVC drain, waste and vent pipework (21.6%) and polyethylene pipework (25%).

Non-residential construction is also tracking upward, with the average building cost per square metre (excluding educational buildings) increasing 1% over the quarter and 1.8% annually. Taken together, the data points to broad-based but moderate inflation, with fuel easing partially offset by continued strength in core material pricing across both residential and commercial projects.