The cost of building a home in New Zealand is edging upward, with timber and cladding prices rising for the first time in several quarters. That is according to QV CostBuilder’s latest quarterly update, which revealed that construction costs rose 0.5 per cent over the past three months and 1.1 per cent over the year, a modest increase compared to the 38 per cent surge between 2020 and 2024.
QV CostBuilder quantity surveyor Martin Bisset said the market is showing “gentle upward movement after a prolonged period of flat or falling costs.” He said it’s not a surge by any means, “but we’re starting to see some early signs of cost pressure returning, particularly in timber, cladding systems, and some specialist finishes.”
Structural timber prices jumped 5.2 per cent, proprietary cladding systems rose 5 per cent, concrete climbed 4.5 per cent, diesel was up 3 per cent, and painting and specialist finishes increased 2.3 per cent. Plumbing materials fell 1.5 per cent, with PVC tanks down 36.1 per cent and Buteline pipe fittings down 8.1 per cent.
Bisset noted that timber increases are particularly significant because they underpin overall building costs. He described the market as “less a broad-based rise, and more a patchwork of increases and decreases,” adding that while more rates are rising than reducing, overall costs remain stable.
Regulatory reforms could add further complexity.
Proposed changes to the Building Act — including proportionate liability, mandatory warranties and professional indemnity insurance — may lift compliance costs in the short term. “Any regulatory change tends to create uncertainty before it creates efficiency,” Bisset said, warning that new requirements could be passed on to developers and homeowners, though proportionate risk-sharing may reduce disputes over time.
Looking ahead, Bisset said 2026 is likely to be another year of low construction inflation, supported by the Reserve Bank’s recent cut to the Official Cash Rate to 2.25 per cent. “2025 has been a year of stability, and 2026 will likely be another year of low construction inflation,” he said. “With the OCR recently having been lowered again to 2.25%, 2026 will be a good time to build.”
He cautioned, however, that if lower borrowing costs trigger a rush to build, the sector must have enough capacity to cope. “If there isn’t the capacity, it could lead to the cost increases we saw in the early 2020s.”
Non-residential building costs remain steady, rising 0.5 per cent this quarter and 0.8 per cent over the year. Bisset reminded builders and developers that averages mask variation. “Bear in mind that all of these figures are averages and the true cost of construction will always depend on the level of finishes, internal layout, and all manner of other elements,” he said.
