Source: Quality Valuations (QV)
The cost of building a home is starting to edge up again, with QV CostBuilder’s latest data showing the first signs of upward pressure as timber and cladding prices rise in the final quarter of 2025.
In QV CostBuilder’s latest quarterly update for November, approximately 15,600 current material and labour prices were applied to its database of more than 60,000 rates across Auckland, Hamilton, Palmerston North, Wellington, Christchurch, and Dunedin. This has produced about 14,500 (23.8%) changes to the data over the six centres, in the Cost Planning and Detailed Trade Rates sections.
The average cost of constructing a standard one- or two-storey 150–230m² home in these centres rose 0.5%, over the past three months, and 1.1% over the past year, in sharp contrast to the 38% increases seen between 2020 and 2024.
QV CostBuilder quantity surveyor Martin Bisset said the market is showing signs of gentle upward movement after a prolonged period of flat or falling costs.
“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,” he said.
“For the past year we’ve seen a general cooling in construction inflation, but the latest data shows pockets of the market are tightening again. These aren’t dramatic shifts, but they’re worth watching as activity begins to firm heading into 2026.”
The most notable price movements this quarter, in terms of decreases, were plumbing materials, which were down 1.5%, due to the price of PVC tanks decreasing significantly (-36.1%) and Buteline pipe fittings, which were also down (–8.1%).
While notable price increases were Structural timber (+5.2%); Proprietary Cladding Systems (+5.0%); Concrete (+4.5%) due to a rise in waterstops; Diesel (+3.0%); and Painting & Specialist Finishes (+2.3%).
Mr Bisset noted that while the headline figures remain low, changes in prices are appearing more often. Although there are some decreases, increasing timber prices are more likely to affect the overall building cost, because it is a principal component.
“What we’re seeing is less a broad-based rise, and more a patchwork of increases and decreases. There are more rates rising than reducing, but overall construction costs are stable,” he said. “For builders and developers, this means the overall cost of a project may not change much, but the mix of where those costs sit is shifting.”
Industry outlook and regulatory changes
Recent proposed changes to the Building Act — including the move from joint-and-several liability to proportionate liability, plus mandatory warranties and professional indemnity insurance for design professionals — could influence construction costs over time.
While these reforms aim to improve fairness and reduce council exposure for construction defects, their implementation will be critical.
“Any regulatory change tends to create uncertainty before it creates efficiency,” said Mr Bisset.
“If warranties and insurance requirements add new compliance costs, those will almost certainly be passed through to developers and homeowners. But on the other hand, more proportionate risk-sharing may reduce delays and disputes down the line.”
The outlook for 2026
With recent reductions in the OCR and low construction inflation, 2026 will be a good time to build according to Mr Bisset.
“2025 has been a year of stability, and it is very likely that 2026 will 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. The Reserve Bank has stated it expects this rate cut will have a moderate effect on the future growth of house prices.”
However, he warned the danger with a low OCR, is that if there is a rush to build, there needs to be enough capacity in the sector to cope. “If there isn’t the capacity, it could lead to the cost increases we saw in the early 2020s,” he said.
Non-Residential Buildings
In the meantime, costs for non-residential buildings (excluding educational buildings) remain stable, rising modestly by 0.5% this quarter, but with an annual cost increase of just 0.8%.
“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,” Mr Bisset added.
QV CostBuilder
QV CostBuilder is New Zealand’s most comprehensive subscription-based building cost platform. In this update, more than 15,600 current material prices were applied to its database of more than 60,000 rates, generating about 14,500 changes to the data across six centres.
Powered by state-owned enterprise Quotable Value, QV CostBuilder’s comprehensive database covers everything from the building costs per square metre for banks, schools, and office buildings, to the approximate cost per sheet of GIB and more than 8,000 other items. It also includes labour rates, labour constants, and much more.
Visit QV CostBuilder at costbuilder.qv.co.nz
