Building Cost Inflation: How Much to Build a New House in NZ in 2022

Auckland remains the most expensive city in New Zealand to buy a house – but it’s not the most pricey when it comes to building a new property.

Building Costs: How Much to Build a New House in NZ in 2022? In this article we cover:


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

So, over the past year and half, how have things changed? Well, one thing remains the same: Auckland is still the most expensive place in NZ to buy property.

Average cost of building a house in New Zealand

Median cost of a house in NZ

Over the past year, the NZ property market has run crazy hot. Auckland remains in top spot for median prices, but plenty of other regions are on its tail. And there have been some huge year-on-year increases. According to REINZ’s February 2022 Property Report, nationally, median house prices across New Zealand increased annually by 20.5%, from $730,300 in January 2020 to $880,000 in January 2021. Although prices in January have cooled a little compared to last December’s figures.

Around the country:

Region Median Price YoY Increase
Auckland $1,200,000 20.6%
Bay of Plenty $942,000 22.8%
Tasman $915,000 23.6%
Wellington $911,000 14.6%
Waikato $830,000 25.8%
Northland $810,000 29.6%
Hawke’s Bay $785,000 13.4%
Nelson $765,000 7.4%
Otago $735,000 13.1%
Marlborough $700,600 27.4%
Gisborne $650,000 30%
Canterbury $650,000 28.1%
Taranaki $630,000 21.2%
Manawatu-Whanganui $600,000 14.2%
Southland $430,000 9.7%
West Coast $345,000 32.7%

Source: REINZ

Cost of building a new house in 2020

But what about the cost of building a new home? In 2020, the national average cost per m² was $2359, and the average price of a new build was $368,667. Region to region, the numbers looked like this:

Region $ per m2 Average Price Average Size
Otago $2676 $450,694 168m2
Wellington $2612 $349,165 133m2
Bay of Plenty $2472 $380,715 154m2
Auckland $2443 $362,689 148m2
Hawke’s Bay $2431 $385,200 158m2
Nelson $2402 $401,434 167m2
North Island $2397 $366,347 153m2
Gisborne $2394 $419,505 175m2
New Zealand $2359 $368,667 156m2
Northland $2341 $421,817 180m2
Marlborough $2322 $436,854 188m2
Tasman $2267 $407,170 179m2
South Island $2251 $376,168 167m2
Waikato $2235 $379,483 170m2
Canterbury $2113 $345,349 163m2
Southland $2110 $393,325 186m2
Taranaki $2078 $348,999 168m2
Manawatu-Whanganui $2046 $336,119 164m2
West Coast $1976 $315,093 159m2

Average costs are estimates based on building consent applications and exclude fees and land prices.

New build NZ

Cost of building a new house in 2021

So, by the end of 2021, how had things changed? Did the price for building new homes rise as much as prices for existing homes? The answer was yes … and no.

Nationally, the average price per m² increased from $2359 (2020) to $2463 (2021). That’s an increase of 4.4% – a far smaller percentage than the increase in median house prices. However, the average price of a new build increased less, by 3.45%, from $368,667 (2020) to $381,404 (2021). Which is due to the fact that we’re building smaller houses.

For although nationally the average size is pretty much the same, 156m2 in 2020 to just 155m in 2021, in some areas the downsizing is more pronounced, see below for more details.

Wellington boasted the biggest per m2 costs, while Taranaki and Canterbury were the cheapest. However, remember these are just average prices. Costs vary build to build, due to differing house sizes, and these numbers are just estimates based on building consent applications to the end of 2021.

Region $ per m2 Average new build price
Wellington $2804 $384,694
Otago $2766 $461,916
Hawke’s Bay $2622 $377,085
Northland $2544 $450,256
Auckland $2543 $372,327
Bay of Plenty $2515 $393,606
North Island  $2511 $383,177
New Zealand  $2463 $381,404
Nelson $2440 $402,834
Tasman $2405 $416,237
Waikato $2337 $404,342
Marlborough $2322 $436,854
Manawatu-Whanganui $2307 $395,966
Southland $2290 $407,581
South Island $2251 $376,168
Gisborne $2245 $280,952
West Coast $2243 $333,297
Taranaki $2241 $360,799
Canterbury $2174 $342,635

Rising cost of building a new house in 2022

As we’ve already mentioned, the costs we’ve listed above are estimates based on building consent applications. They are also average prices from January to September, so they don’t reflect accurately the recent huge spike in the cost of building materials. Price increases that look set to continue.

According to the latest Cordell Construction report into residential building costs, prices increased throughout 2021. The report states that the cost to build a standard 200m2 brick-and-tile house was up by 6.1% for the 2021 calendar year.

This is a figure that’s in line with the inflation rate. During 2021, the consumers price index increased 5.9% from the December 2020 quarter to the December 2021 quarter. However, industry experts reveal that this is a conservative figure, and that down on the construction site, where boots get dirty, the actual increases in building costs are much higher.

“I’m surprised to read those figures. They seem low!” says Trent Simpkin, of Arcline Architecture. “For a bit of reality, we had a project that was fully priced in December 2020 at late $900s. It has just been repriced at $1.1 million. So that’s around a $100-$150k increase over the 12-month period. Same builder, same materials, same everything, just new prices!

“This is consistent with what we’ve been estimating. There’s a 10% to 15% real increase on the final build cost of a house. Another project we ran our estimating tools on was $1,038,000 18 months ago. Builders have now priced it at $1.15m to $1.2m. I’d say the average cost of a normal house is now creeping towards $3500 per m2.”

And it seems that building costs are set to continue. Due to increased demand and already strained supply chain networks, building supply companies are already warning customers about continued price increases over coming months.


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 rampant inflation, when pricing a new build, there are other factors involved that 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. “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 $2500m², in reality, it’s more of a $3500m² 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 $4000m².

  • 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

Related article: Building Costs Per Square Metre in NZ: Busting the Myth

We’re building more, smaller homes!

But while myriad factors affect the cost of a build, one thing is clear, we’re building more, smaller homes. Ten years ago, we were building fewer homes than in the mid-1970s. However, since then the pace of building has ramped up.

There were 47,715 new homes consented in the year to the end of October 2021, a record figure that’s up 26% compared with the year ended October 2020.

However, as you can see below, the homes we’re building are shrinking in size.

Years 1974 2000 2010 2020 2021
Homes consented 39,525 25,010 28,038 39,420 36,040
Average floor area 110m2 166m2 182m2 156m2 1552

Region to region, while there’s still quite a difference in the size of houses we’re building, pretty much across the board all the homes we’re building are smaller.

Region Average Size 2020 Average Size 2021
Marlborough 192m2 188m2
Southland 186m2 178m2
Northland 180m2 177m2
Tasman 179m2 173m2
Waikato 170m2 173m2
Manawatu-Whanganui 164m2 172m2
Otago 168m2 167m2
Nelson 167m2 165m2
South Island 167m2 161m2
Taranaki 168m2 161m2
Canterbury 163m2 158m2
Bay of Plenty 154m2 157m2
New Zealand 156m2 155m2
North Island 153m2 153m2
West Coast 159m2 149m2
Auckland 148m2 146m2
Hawke’s Bay 158m2 144m2
Wellington 133m2 137m2
Gisborne 175m2 125m2

New build: 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.

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.

 

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About the author of this page

Bruce PitchersThis report was written by Canstar’s Editor, Bruce Pitchers. Bruce began his career writing about pop culture, and spent a decade in sports journalism. More recently, he’s applied his editing and writing skills to the world of finance and property. 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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