Building Costs Per Square Metre in NZ: Busting the Myth

When trying to work out the cost of a new home, estimating the price can be difficult. Especially, if you’re using average building costs per square metre. Matt Williams, from quality new home builder Build7, explains how the practice can be misleading and negatively impact design decisions.

What are building costs per square metre?

If you’re in the market for a new home, it’s likely that you’ve come across standard square metre rates (m²). On the face of it, the m² measurement offers what appears to be a neatly wrapped and boxed price across the plans of a home.

However, the standard m² numbers are often calculated differently depending on the industry:

• For an existing home, chances are this number is a function of the dollar value of homes in a neighbourhood, and the m² of the homes in the area
• For a new build, it can be a mix of the above, along with the cost of the land and earthworks, plus builder and material costs

Why can building costs per square metre be misleading?

There are a few reasons why m² figures are often misleading. Often, they:

1. Do not adequately account for the massive role of design in building a new home

2. Insufficiently address the unique needs of each and every new home buyer

3. Assume an inaccurate distribution of building costs and materials

For a clearer picture, here’s an example to help illustrate these issues in the context of a new home design. In our scenario, there are two home designs. Each design is unique in its dimensions, but has the same calculated internal square meterage.

Home A

Home A dimensions: 8m x 8m – an internal area of 64m²
Circumference = 32m

Home B

Home B has the dimensions 16m x 4m – an internal area of 64m²
Circumference = 40m

Were a potential builder to provide a flat rate for m² applying to both layouts, they would overlook a crucial factor: circumference.

While both homes share the same internal square meterage, the difference in circumference is 8m. This introduces a significant amount of additional design considerations.

The additional timber, trusses, cladding, siding or render, bricks, windows, gib and labour required to cover those additional eight meters could make the difference in price between these two homes a substantial one.

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As we mention above, the standard m² rate fails to account for the design process. This all-important aspect of building a new home determines how much internal space is required, how many windows are needed, the configuration of the home, etc.

Of course, if you buy an existing home, these factors are already decided for you. Building new to a specific spending plan is the best way to ensure that you get a home that matches your lifestyle and budget. Only then can accurate building costs be calculated and the home building process remain equitable for the buyer.

At Build7, we believe that this is what great builders do. That’s why we emphasise the design process and provide drawings and 3D fly-arounds of our clients’ designs. Our three rules based on cost, collaboration and clarity are:

We never build the same home twice. Each is different, reflecting the needs of the customer – and that’s why our buyers love them, because we build to their bespoke designs.