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NZ building materials costs are highly competitive

Deloitte Report highlights NZ building materials costs are highly competitive

Building construction costs are very similar between New Zealand and Australia

Auckland, 17 May 2019 – The Building Industry Federation of New Zealand today welcomed the Deloitte Report on the ‘Cost of residential housing development’ as a welcome piece of independent in-depth research

that shows for the first time that housing construction costs (e.g. building materials and labour) are very similar and in some cases cheaper between New Zealand and Australia.

Julien Leys, Chief Executive of the Building Industry of New Zealand (BIF) says the Deloitte report highlights that building construction costs are a small overall part of the cost of a house.

“The Deloitte Report unequivocally shows that key building materials such as timber, steel and plasterboard actually contribute very little to the total cost of a house - these materials are approximately 1%-4% each of the total cost of a house. This is pleasing to see because it validates what many in the industry have been saying for some time."

Leys adds that the Deloitte Report highlights that land and infrastructure are the most significant cost in residential development.

“The real issue that we need to focus on when it comes to understanding why house prices in New Zealand have increased significantly compared to relative income levels and other countries is that land prices

depending on location have shot up by 50% over the last decade. Not surprisingly 32% of the cost for a standalone house in Auckland is due to the cost of land and infrastructure versus 19% for building materials overall.”

Leys also notes that the Deloitte Report identifies that the level of competition in the New Zealand marketplace is working very effectively.

“Cleary the rapid rise in imported building products since the Christchurch earthquake has acted as a brake on prices with many New Zealand building materials manufacturers and suppliers absorbing increases in input costs such as raw materials which tends to get forgotten in the debate.

"This is proof that competitive pressure driven by imports has kept prices low and again this has benefited home owners and consumers who expect to receive building products that meet New Zealand standards and conditions."

ENDS

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