New Zealand’s residential construction costs are rising at one of the slowest annual rates on record with CoreLogic NZ’s latest Cordell Construction Cost Index (CCCI) recording a growth rate of 0.9% over the past year.
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%.
CoreLogic NZ Chief Property Economist Kelvin Davidson said it’s the second-lowest annual increase since the index began in 2012 and a significant shift after the double-digit growth seen during the COVID-era construction boom.
The CCCI’s peak annual growth rate was 10.4% in Q4 2022, and the long-term average is 4.2%.
“After several years of intense upward pressure, construction costs have now settled into a much slower rate of growth,” Mr Davidson said.
“But 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.”
The March quarter saw a familiar mix of price shifts across key materials. 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%.
Mr Davidson said these changes reflect a sector 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,” he said.
The sharp drop-off in new dwelling consents and eventual building work over the past 2-3 years has helped take the heat out of costs. Stats NZ figures show approvals are down across most regions in the past 12 months, except for Otago, which recorded a 25% lift.
Overall, national consent volumes are around one-third below their peak.
“Some builders now have spare capacity, which is helping cap further price rises,” Mr Davidson said.
“Construction activity appears to have stabilised, however any signs of a recovery remain tentative.”
Looking ahead, Mr Davidson said easing interest rates and favourable lending conditions for new builds may support a modest lift in construction demand, but any return to the double-digit growth rates for costs experienced in 2022 is unlikely.
“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,” he said.
“The key trend this year is construction costs are no longer spiralling but they’re also not falling. For now, we’re in a holding pattern, which will come as a welcome relief for builders, developers and households alike.
For more information visit: https://www.corelogic.co.nz/news-research/reports/cordell-construction-cost-index
CoreLogic New Zealand