Relief for residential developers

Is now the ideal time to build a home? National residential construction costs are rising at one of the slowest annual rates on record.

CoreLogic NZ’s latest Cordell Construction Cost Index (CCCI) reports a growth rate of just 0.9% over the past year. “After several years of intense upward pressure, construction costs have now settled into a much slower rate of growth,” CoreLogic NZ Chief Property Economist Kelvin Davidson says.

It’s the second-lowest annual increase since the index began in 2012, he notes, and a significant shift after the double-digit growth seen during the Covid-19-era construction boom.

The Q1 2025 national CCCI, which tracks the cost to build a typical new dwelling, rose 0.3% in the March 2025 quarter, down from
0.6% in Q4 and well below the long-term quarterly average of 1.0%. The CCCI’s peak annual growth rate was 10.4% in Q4 2022, and the long-term average is 4.2%.

So, can eager landowners begin the build? “This is a moderation, not a retreat. Labour doesn’t tend to get cheaper, and while materials pricing has flattened out, we’re not seeing any decline in the overall cost to build,” Kelvin advises.

Prices shifted across key materials in the March quarter, which Kelvin put down to the industry returning to more normal patterns after several years of disruption. “We’re well past the extremes of 2021 and 2022, where costs surged across the board. These days, we’re seeing more nuanced movements, driven by specific supply and demand factors rather than industry-wide pressure.” In March, roof flashings and sheet metal rose by 3–4%, structural steel ticked up by around 1%, while kitchen cabinetry fell 2%, and plumbing PVC pipework and fittings dropped by 3%.

A mixed blessing
Coupled with easing interest rates and favourable lending conditions for new builds, the latest CCCI news could force residential building costs to rise again. “If new-build activity picks up again, and there are signs it might, we could see construction costs start to rise a little more quickly over the next year or two,” Kelvin adds. Providing slight relief, he says any return to the double-digit growth rates experienced in 2022 is unlikely. “For now, we’re in a holding pattern.”

For more information visit www.corelogic.co.nz/news-research/reports/cordell-construction-cost-index