Building cost inflation normalises

Industry will be pleased to hear that the cost of building a home has largely stabilised.

The latest QV CostBuilder quarterly update for August has found that the average building cost per square metre for residential buildings has increased by 0.3 percent this quarter.

That is the same rate of increase that was reported in both the February and May quarters.

This finding gives builders and developers more certainty on price than at any point since the COVID-19 pandemic began.

Coronavirus meant unpredictability for the construction sector, but this report confirms that the sector has somewhat normalised.

“This is good news for anyone looking to build right now, as it will give them more confidence that the estimated cost of a project will indeed be in the same ballpark,” QV CostBuilder spokesperson Simon Petersen says.

“What we’re continuing to see is building cost inflation returning to much more ‘normal’ levels,” Petersen adds.

“However, there is still an abundance of economic and geo-political uncertainty that has the potential to impact construction costs moving forward.

“This includes the possible escalation of conflicts in the Middle East and Ukraine, which could affect global supply chains.”

Changing construction costs

He said the average building cost per square metre for non-residential buildings had also increased by 0.2 percent this quarter.

This represents a slight reduction in the quarterly growth rate from 0.3 percent and 0.4 percent in February and May, respectively.

Interior doors and sanitary plumbing costs were the largest elemental price increases.

“On average, each trade rate also increased by 0.2 percent this quarter, with hardware and demolition up 2.9 percent and 1.4 percent respectively,” a recent QV release reads.

“In contrast, the cost of steel framing reduced by 5.7 percent, and suspended ceiling costs dropped by 4.5 percent due to a reduction in suspended ceiling framing and panel rates.”

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