SLOWING costs

The average cost of building a home in New Zealand’s main centres increased by 11.3 percent last year, but the good news is that the rising cost of construction appears to be slowing down.

Industry watchdog QV CostBuilder’s December price update analysed more than 51,500 rates to reach the latest increase in the cost to build a standard three-bedroom home.

This compares with a 20.9 percent annual increase in its May 2022 update.

Spokesperson and quantity surveyor, Martin Bisset says it appears that construction costs may finally be levelling o now, although at double-digit growth over the past year, there’s a long way to go to pre-pandemic prices.

The biggest elemental price increases since the May update related to framing, which went up 9.5 percent due to the increasing cost of precast concrete, reinforcing and structural steel. Costs related to exterior walls and exterior finish went up 7.7 percent, and the cost of upper floors and stairs and balustrades went up 7.4 and 6 percent respectively.

How are forward bookings and existing contracts handled in a sales process?

It is exciting for a Purchaser to have forward bookings or existing contracts when they purchase a business – these provide confidence in the business.

Often an Agreement for the Sale & Purchase of a Business will have a clause of acceptance by a Purchaser undertaking that they will honour all forward bookings and existing contracts included with the business, providing that they can be provided profitably. There is no advantage to a Purchaser if the goods or services can’t be provided at a profit for them.

With forward bookings, any deposits received by the Vendor for these will be passed on to the Purchaser to enable the goods or services to be provided.

Existing contracts (often with suppliers to the business) will need to be renewed with the Purchaser (who should ensure that the terms and conditions remain the same as those enjoyed by the Vendor). These matters are normally dealt with quite smoothly at sale time and should not cause disruption to the process.

QV CostBuilder is a subscription-based building cost platform, powered by stateowned enterprise Quotable Value, with a database of more than 60,000 rates across six regions of New Zealand, including Christchurch. It covers everything from the building costs per square metre for banks, schools, and o ce buildings, to the approximate cost per sheet of GIB and more than 8000 other items, plus labour rates, labour constants, and more.

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