What is the cost of building a house in NZ?
In New Zealand, the cost of building a house has risen dramatically in the past few years. While the cost of each project varies based on location, labour, and materials, costs have gone up significantly across the board.
In this article, we discuss the various building costs in New Zealand and how these compare to the past few years. We cover the impact of consent, the new H1 insulation standards, and material and labour costs. We also explain how your costs will vary depending on whether you choose to build with an architect, a group home builder, or a prefab building company.
Post-pandemic building costs
Due to the effect of the pandemic on labour and materials, building costs rose 30% from 2021 to 2023. In New Zealand, this has been exaggerated, with fluctuating prices, rising interest rates, and supply chain issues leading people to hold off on building. While these initial challenges have settled down in 2023, inflation poses a new problem.
The average cost of building a house NZ
According to data published by Canstar, the cost of building a new home is rising. Throughout 2022, New Zealand experienced building cost inflation of 10.4% and, so far, prices have continued to increase. Looking at the building consent applications from January to August 2023, national construction costs are up 12%.
*Please note that this data excludes fees, project management, and land prices. At Genius Homes, our base costs include full project management as a standard inclusion.
Building consent costs
New dwelling consents remain high at more than 40,000 on a 12-month rolling basis. Builders are working their way through previously approved dwellings, along with an ongoing stream of alterations and additions. However, this is slowing down and capacity pressures are easing, which will have a flow-on effect to reduce construction costs.
H1 Insulation Standards
The new H1 insulation standards for the South Island began in May 2023, potentially adding 3-5% to the overall cost of a project. These changes brought some of the biggest changes to insulation in over a decade, leading to major shifts in both material and design costs.
Had it not been for these changes, the overall Cordell Construction Cost Index would likely have slowed even further in Quarter 3 of 2023.
Material and labour costs
According to the 2023 Cordell Building Indices, material and labour costs to build a standard home* only rose by 0.5% in Quarter 3. This is the lowest figure since 0.4% in Quarter 4 of 2020. This has brought the annual rate down to 3.4% and shows the growth rate has begun to ease.
*A standard home is a single-storey, three-bedroom, two-bathroom, brick-and-tile standalone dwelling built over a normal build-time duration.
Architect, building company, or prefab?
The cost of a new house will depend on the process you choose – architect, group home builder, or prefab building company?
If you want a high-end home with a lot of customised features, you may want to work with an architect. This is more expensive and time-consuming but it will allow you to design the home exactly how you want it.
Generally, architects will charge based on a percentage of the entire project value and can range from 3% to 12%. However, this is extremely variable depending on the firm. Keep in mind that the design stage for architectural projects is prone to timeline delays, particularly with the consent process.
Group home builders
Building companies often offer turnkey packages, which may include land, standard house plans, project management, and construction. This is more cost-effective than working with an architect, but the on-site portion of the project is still prone to delays and high labour costs.
Because of these delays and unforeseen challenges, the cost of an on-site-built home is likely to be higher than your initial quote. We recommend budgeting for these budget blowouts and having a backup plan in place in case your deadlines are pushed out.
Prefab building companies
Prefab building companies typically complete all house design, planning, project management, construction, delivery, and site work as one complete package. Most of the planning and design is incorporated into your initial base cost and, if you decide to customise the home, the total price can be easily adjusted to reflect that.
One of the main advantages of prefab homes is predictability, which eliminates the risk of unexpected costs and delays throughout the project. At Genius Homes, the base costs for our pre-designed homes are fixed and final. This allows us to give you a clear price right at the beginning and outline any additional design costs before the project kicks off.
For reference, the base cost of our prefab house range starts at around $145,000 and ranges up to about $580,000. You will also need to consider the delivery cost which can cost anywhere from a few thousand to $40,000, depending on the size and location.
Prefab home loans
At Genius Homes, we can help you access a prefab loan with BNZ. These loans are specialised for prefab construction and allow both you and BNZ to own the work in progress so that all work is paid for on time. BNZ will take security over the land and the prefab, allowing them to treat the funding similarly to a conventional house build.
The prefab construction process
The majority of prefab construction is completed off-site in a specialised factory. This reduces weather delays and commuting, helping us to streamline the entire project and stick to your budget.
Here at Genius Homes, our 7-step construction process is designed to provide a cost-effective and hassle-free experience.
- Financing and initial consultations
- Proposal and design sign-off
- Colour selection and council consent
- Construction and inspections
- Interior and inspections
- Delivery and Site works
We have a range of house designs you can choose from or you can customise them to suit your unique lifestyle. From compact 2-bedroom layouts to generous family homes, we have something for everyone.
If you’re interested in finding out more or want some expert advice, contact our team today. We’d love to discuss your project with you and develop a plan that meets your budget, timeline, and design preferences. Book a call with one of our prefab home specialists today to find out about your options.