Building costs: a materials world

Building costs

A MATERIALS WORLD BOARD: OF THE SAGA…

Whether we’re renovating or building a new home, cost all comes down to brass tacks. While politicians are intervening to help shore up supply chain issues and address inflation, uncertainty is still prevalent.

In New Zealand, houses are usually built of wood; in New Zealand, we grow a lot of trees. However, in New Zealand construction costs have been through the roof. Costs were continuing to rise as this edition of Design & Build was finalised.

“The latest Cordell Construction Cost Index (CCCI) clearly shows that it [is becoming] more expensive to build a ‘standard’ 200 sqm brick and tile, standalone house in New Zealand,” Kelvin Davidson from CoreLogic NZ said. “I wouldn’t be surprised to see the rate of construction cost accelerate further before it starts to ease up in 2023.”

Both the quarterly and annual indexed growth measures in index for the third quarter of 2022 exceeded records set three months earlier, he confirmed.

“One encouraging development has been the improvement in supply chain conditions, with plasterboard for example now much easier to find. This easing in cost growth will be very important in the longer term so developers and households aren’t dissuaded from taking the new-build path which critically assists in boosting overall housing supply.”

Released in August 2022, the Commerce Commission argued that greater competition across the building supplies’ market is required. In a draft report, it stated that:

‘The best options involve enabling the easier entry or expansion of key building supplies. In our view, there is scope to place greater emphasis on competition and innovation for key building supplies, without compromising the core objectives of the building regulatory system.’

Dr Megan Woods (Minister for Building and Construction) agreed with assertations in the draft report that change is needed.

“New Zealand is facing the same global cost of living and inflation pressures as other countries and it is just not acceptable that such an important sector is not working as well as it could be,” she said in response to the Commerce Commission report.

“With good, affordable housing underpinning so many other social, economic and health outcomes… it’s vital consumers get the best deal.”

In addition to a ‘plasterboard taskforce’ and a review of building consents, government measures are in place. However these initiatives do not go far enough, The National Party’s Building and Construction spokesperson (and Port Waikato MP), Andrew Bayly, said.

“It is too difficult for offshore manufacturers and suppliers to gain approval to introduce new products into the New Zealand market – it takes too long and is too costly. This is a major barrier to entry. National wants to see meaningful reform that brings in new innovation and ultimately to see a reduction in costs that Kiwi homeowners face when building a home.”

The full Commerce Commission report is due for release in December 2022; the draft is accessible (in its entirety) by searching ‘building materials’ at www.comcom.govt.nz. To access regular updated property data from CoreLogic, visit www.corelogic.co.nz. Building costs are rising, so can the ‘Plasterboard Taskforce’ save the day?

When it comes to low cost building materials, is the jig up with regards to putting up the GIB? Although GIB (short for Gibraltar board) has been, in a manner of speaking, a ‘garden variety’ building material, shortages sent costs surging during 2022. In response, Minister for Building and Construction, Dr Woods, issued quite the prescription, launching the ‘Plasterboard Taskforce’.

“We know the supply shortage of plasterboard, as a result of GIB manufacturer, Winstone, not meeting demand for its product, has been very stressful for builders,” she said. “Bringing together construction, building consent, and supply chain experts in a taskforce to look at how to get more plasterboard into the hands of builders has been an excellent way for ramping up progress... and to test new initiatives.”

By seeking an expanded range of plasterboard products, the taskforce (comprising construction, building consent, and supply chain experts) appears to have managed to offset supply chain issues. However, its success will take time to measure.

“The Ministry of Building, Innovation and Employment (MBIE) has been making it easier to substitute alternative products if plans specified GIB, with its regular updates as new products are approved,” Dr Woods confirmed. “Taskforce members agreed that plasterboard constraints appear to be easing, and some larger developers have been able to get product into the country. I’ll continue to monitor this issue closely to ensure we are pulling every practical lever we can.”