HomeBuilder adds to construction costs
By Bianca Dabu
18 May 2021
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1 minute read
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Housing construction costs have risen for the sixth consecutive quarter as dwelling approvals surge in response to the recently expired HomeBuilder, according to CoreLogic.
The latest Cordell Housing Index Price (CHIP) – CoreLogic’s national measure of residential construction costs – showed a 0.8 per cent increase over the three months to March 2021, making it the sixth consecutive quarter where costs have risen, albeit by 1.0 per cent or less.
CHIP measures the rate of change of construction costs within the residential market and covers freestanding and semi-detached single and two-storey dwelling homes. It covers several key categories, including brickwork, roofing insulation, doors and hardware, painting, electrical services, carpentry and more.
Housing construction costs rose at a slightly slower than average pace in the March quarter, but this could change as labour and material shortages add pressure on prices, according to CoreLogic.
A construction worker at a housing development (file).
Photo: RNZ / Kim Baker Wilson
Property research firm Core Logic s Cordell Housing Index Price (CHIP), which measures the rate of change in [https://www.rnz.co.nz/programmes/the-detail/story/2018793290/why-it-costs-so-much-to-build-a-house construction costs , rose 1.3 percent in the three months ended March, compared with 0.4 percent increase in the prior quarter.
It was the highest rise since March 2019 and pushed the annual growth rate from 2.9 percent to 3.3 percent.
CoreLogic chief property economist Kelvin Davidson said a perfect storm had come together to drive costs higher. The key thing for construction costs is really the tight capacity in the industry, we ve seen building consents running at historically high levels, so the industry is very busy . according to a lot of reports [it is] running at full capacity, so when you see that in markets and sectors you tend to get cost rises.
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The department s business price delivery manager Bryan Downes said it was not unexpected. “We’ve recently seen average wages in the construction industry increase, increases in the number of people employed in the construction industry, as well as near-record levels of residential building consents. ’
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Kelvin Davidson: People are turning to building a home because there are few to buy. Some of the price rises were potentially due to shipping congestion, the chief executive of PlaceMakers, Bruce McEwen, said. “Many industries in New Zealand are experiencing supply chain and freight issues due to shortages and delays in shipping capacity, container availability and port space.