NZ Construction Update Q2
According to the latest Cordell Construction Cost Index (CCCI) by CoreLogic, we're seeing a fascinating downward shift in building costs.
For the first time since the index began in 2012, the cost of constructing a standard home has actually decreased! We're talking about a 1.1% drop in the second quarter of 2024. This is quite remarkable, considering the previous lowest change was a 0.3% increase back in 2016 and 2013 (CoreLogic, 2024).
What does this mean for you?
Well, if you’ve been dreaming of building your own home, now might be the perfect time to start that conversation. The annual growth rate of construction costs has slowed to just 0.6%, down from 2.3% in the first quarter of 2024 (CoreLogic, 2024).
At Slate, we’re seeing these changes firsthand. Some of our key materials like structural steel, general hardware, kitchen joinery and electrical light fittings have become more affordable.
While this downturn in construction activity isn’t ideal for the long-term housing supply, it does present some unique opportunities for homeowners and investors. New builds are becoming more attractive, especially with the current lending rules favouring construction projects.
Looking ahead, we expect construction costs to remain stable in the coming months. This could be great news if you’re considering a new build or looking to buy directly from a developer.
Certified Builders chief executive Malcolm Fleming said a decline in construction costs was “brilliant”, and consistent with what his organisation’s members were reporting. There was a far more competitive environment for material producers and suppliers and for sub-trades, and that had led to a levelling of costs overall, and even falls in some prices, he said (NZCB, 2024).
At Slate, we’re optimistic about the future. We believe that as the economy stabilises and interest rates potentially lower in 2025, we’ll see a resurgence in building activity. This current period of lower costs could be the perfect chance to get your dream home project off the ground.
Remember, we’re here to help you navigate these changes and create the home you’ve always wanted. Whether you’re just starting to explore the idea of building or ready to break ground, Slate is your partner in turning architectural dreams into reality.
Let’s chat about how we can make the most of this unique market situation for your next project!
For further information please see Cordell Construction Cost Index Report Q2 2024 and NZ Certified Builders.
