How Much to Build a New House in NZ?

How Much to Build a New House in NZ? In this article we cover:

• Median cost of buying an existing house in NZ
• Rising cost of building a new house
• We’re building more, smaller homes
• Hidden costs of building a new home
• Build or buy, which is cheaper?

In August 2020, we first published our article: How Much to Build a New House in NZ? Since then, we’ve updated it regularly, and it remains one of the most popular articles on Canstar’s website.

So, over the past four years, how have things changed? Well, one thing remains the same: Auckland is still the most expensive place in NZ to buy property. But the rise in building costs over the past few years has pushed up the cost of building a new home across the entire country. In many places, once you factor in the price of buying a section, purchasing an existing home can often work out cheaper than building a new house.

Median cost of buying an existing house in NZ

As you can see from the table below, median house prices have settled back to where they were at the end of 2020. Auckland’s median price is up just 1.7% on November 2020’s number, and the national median is up 3% across the same period.

Source: REINZ

While today’s prices are 20% higher than just before the pandemic hit, at the end of 2019, they are down around 17%-19% from November 2021. And while this isn’t good news for those who bought at the market’s peak, a softer housing market is good news for those looking to purchase a home.

Here’s an overview of current median prices around the country:

Source: REINZ

But while house prices have dropped, what about building costs?

Cheapest home loan rates

If you’re currently considering a home loan, the table below displays some of the 2-year fixed-rate home loans on our database (some may have links to lenders’ websites) that are available for first home buyers. This table is sorted by Star Rating (highest to lowest), followed by company name (alphabetical). Products shown are principal and interest home loans available for a loan amount of $500K in Auckland. Before committing to a particular home loan product, check upfront with your lender and read the applicable loan documentation to confirm whether the terms of the loan meet your needs and repayment capacity. Use Canstar’s home loan selector to view a wider range of home loan products. Canstar may earn a fee for referrals.

Rising cost of building a new house

The good news is that the cost of building a new house has fallen, too, according to the Cordell Construction Cost Index, which measures the costs associated with building a regular 200m² three-bedroom, two-bathroom single storey brick-and-tile house in New Zealand. Although only slightly!

In the three months to June, costs fell by 1.1%. While this is only a small amount, it is a move in the right direction, and is the first decline in costs, according to Cordell’s index, since 2012. However it comes after two years of price rises above inflation.

Over 2022, the nation experienced double-digit building cost inflation of around 10%. And, since then, prices have continued to increase.

Looking at the building consent applications from January to May this year, average construction costs are up 16%, nationally, on 2022’s figures. Although, regionally, there is quite a variance, from 1% in Marlborough to 30% in Gisborne.

Note, it’s important to remember that prices vary build to build, depending on the size and design of a home, and the above figures are estimates based on national building consent applications, which don’t include the full costs of building a new home. For more on the hidden costs of building a new home, see below.

And as building costs per m² have increased so, too, have the average prices of consented new builds in most regions:

As you can see, the average 16% rise in building costs per m² is in line with the increase in the average cost of a new build: 14%. The 2% difference can be explained by the fact that, so far this year, the average house size is 2% small than in 2022.

We’re building more, smaller homes!

While myriad factors affect the cost of a new build, one thing is clear, we’re building smaller homes. In the early 2000s, we were building fewer homes than in the mid-1970s. However, since then the pace of building has ramped up.

In 2022, the number of new dwellings consented reached a peak of 49,538, up 26% from 2020’s number. But as you can see below, the homes we’re building are getting smaller. Homes built this year are, on average, 9% smaller than those consented back in 2020, and 22% smaller than in 2010.

Region to region, while there’s still quite a difference in the size of the houses we’re building, across the board most homes are getting smaller:

Searching for the Cheapest Personal Loan?

If you’re looking for the cheapest personal loan, Canstar’s personal loan comparison tables can help. The table below displays the sponsored unsecured personal loan products available on Canstar’s database for a three-year loan of $10,000 in Auckland, with links to lenders’ websites. Use Canstar’s personal loan comparison selector to view a wider range of products on Canstar’s database. Canstar may earn a fee for referrals.

Hidden costs of building a new home

However, even without building cost inflation, when pricing a new build, there are other factors involved that can push up costs.

“When most architects and designers submit building consent applications the build value figure we put in is as low as possible, to keep the consent costs down. Because the value of the build impacts the consent fee,” says Trent Simpkin, of Arcline Architecture.

“Yes, it could be considered inaccurate, but councils should only need to know the value of the consentable items. So, for example, if we say a house is $3000 per m² on a consent application, in reality, it’s more of a $4000 per m² build.

“The shape and circumference of a home are big players in the cost of the build, too. A square house has the least perimeter of any shape, so is the cheapest to build, as it requires less cladding, insulation, roofing, etc. Whereas a house the same size split into individual pods will cost more.”

If you’re trying to keep costs down, Trent advises to avoid the following, which could push the cost of your build well over $4000 per m².

• Elevated sites, exposed to the wind
• Steep (or even not so steep) sites that require retaining walls
• Unsuitable ground requiring engineering design
• Large square metres of glass (requiring steel portals)
• Open expanses of living areas (requiring engineering due to lack of walls to brace)
• Cantilevered decks, roofs, floors
• Expensive cladding, like cedar, and roofing, such as tray roofing
• Difficult site access
• Any build methods that are time consuming

Build or to buy? Which is cheaper?

Before we start the sums, let’s just make it clear that we’re talking about averages here. Construction costs, the price of existing properties, and land prices vary from region to region, suburb to suburb and house to house.

But it’s clear that the rise in construction costs has pushed up the price of new builds to a level where they are comparable, and often more expensive, than buying existing homes once you factor in the cost of land.

The most recent government report into land prices reveals that in Auckland, back in 2021, urban-zoned land was valued at around $1300 per m², in Tauranga it was $1100 per m², while in Wellington, Hamilton and Queenstown prices ranged between $400-$500 per m².

The median point in these numbers is around $850 per m². So let’s say the average price is $800 per m², because when applied to a typical 500 per m² section, it works out to a cost of $400,000 for an average NZ section.

So if you add the average cost of building a home in NZ ($463,570) to the cost of an average section ($400,000), you get: $863,570.

And what was the national median house price according to REINZ? Yep: $770,000 – so, yes, buying a section and building a new home on it could well end up costing you considerably more than just buying an average existing home.

Although, at least if you buy a new property, you shouldn’t have to worry about renovation or upkeep costs for a few years!

Lowest construction loans

If you’re considering a new build, big or small, wherever you are in the country, it’s worth reading our story What is a Construction Home Loan. For as you’ll see, the structure of a loan to build a new home is usually different to a standard home loan, and usually feature floating rates during the construction stage.

If you’re currently considering a home loan, the table below displays some of the floating home loans on our database (some may have links to lenders’ websites) that are available for home owners looking to refinance. This table is sorted by Star Rating (highest to lowest), followed by company name (alphabetical). Products shown are principal and interest home loans available for a loan amount of $500K in Auckland. Before committing to a particular home loan product, check upfront with your lender and read the applicable loan documentation to confirm whether the terms of the loan meet your needs and repayment capacity. Use Canstar’s home loan selector to view a wider range of home loan products. Canstar may earn a fee for referrals.

Compare home loans

About the author of this page

This report was written by Canstar’s Editor, Bruce Pitchers. Bruce has three decades’ experience as a journalist and has worked for major media companies in the UK and Australasia, including ACP, Bauer Media Group, Fairfax, Pacific Magazines, News Corp and TVNZ. Prior to Canstar, he worked as a freelancer, including for The Australian Financial Review, the NZ Financial Markets Authority, and for real estate companies on both sides of the Tasman.

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Similar Topics:

• home loans
• House prices
• housing market

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