In a historic shift, New Zealand's residential construction industry has experienced its first decrease in building costs in over a decade. The latest Cordell Construction Cost Index (CCCI) shows a 1.1% drop in the three months leading up to June, marking a significant milestone in the industry. This development opens up exciting opportunities for homeowners considering renovation projects.

According to CoreLogic Chief Property Economist Kelvin Davidson, the recent decline follows a period of high building consents and the resolution of COVID-19 supply chain issues. With a quieter construction period, cost growth has now dipped below long-term averages.

If you are planning a home renovation project, now is the perfect time to get started. Contact Refresh Renovations for an initial consultation and take advantage of the reduced construction costs today.

The annual growth rate of construction costs has slowed significantly, dropping from 2.3% in the first quarter of 2024 to a record low of 0.6% in the second quarter. The flattening of building materials costs, coupled with a slowdown in average hourly wage growth, has reversed the rapid construction cost increases seen in recent years.

Key materials such as structural steel and kitchen joinery have seen price reductions, alongside decreases in costs for tapware and electrical light fixtures. Davidson notes that the spike in construction costs during 2022, driven by lingering supply chain issues and a construction boom, has now settled as material supplies normalize and dwelling consents fall.

The increase in available established properties has also played a role, reducing the demand for new builds and providing homebuyers with more options. Changes to the Brightline Test and interest deductibility rules have further decreased the appeal of new builds for investors.

Looking ahead, forecasts suggest that construction costs may remain flat in the coming quarters. New debt-to-income rules introduced by the Reserve Bank of New Zealand, effective from July 1, 2024, exempt construction loans from banking restrictions, alongside existing loan-to-value exemptions. These measures aim to stimulate construction by making financing more accessible.

For those considering a home renovation, now is the perfect time to take advantage of these reduced costs. Get in touch with Refresh Renovations for an initial consultation and start turning your renovation dreams into reality. Don’t miss out on this unprecedented opportunity to save on construction costs and enhance your living space.

Read the full report on the Cordell Construction Cost Index at CoreLogic's website.