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How Much Does it Cost to Build a House in New Zealand?

If you're planning to build a four-bedroom house, the size will be around 200 m2 and, based on current costs, the budget will need to be at least $500,000 (excluding land, fencing and landscaping). However, a lot is changing - our guide explains everything you need to know
Updated 19 July 2024
Important: Right now, the cost to build a house is unstable. We have made the decision to limit the publication of house build cost data because it keeps changing. We believe displaying extensive pricing tables could be misleading. Instead, we give numbers and their trusted sources as a baseline. We also extensively outline what you can do to minimise the costs as you plan to build and where you can find the latest data to help make decisions.

Summary:
  • Material prices keep increasing; our guide to the average cost of building per square metre outlines the current supply issue problems. Many New Zealanders have, with good intentions, signed building contracts in between 2019-2022 only to be told of a price jump of $100,000, $200,000 or even $500,000 (on higher-end builds).
  • In 2023, the number of building consents was dropping (per the May 2023 Stuff.co.nz article) suggesting some help for prospective home builders.
  • Auckland is the most expensive place to buy a home, but Otago is the most expensive for building. However, when land prices are included in the total build cost, Auckland is higher than any other region.
  • Despite a strong NZD and increasing interest rates deterring some development, it's difficult to see a time where the cost of building a home will stop increasing. In short, there is too much money chasing too few goods despite  a drop in building consents being issued.
  • Banks offering construction loans always favour fixed price builds, but builders are less willing to offer such contracts given the surge in material costs. This RNZ story from September 2021 suggests that getting a mortgage could become harder if builders become unwilling to sign fixed price home build contracts.

To help you understand how much it costs to build a house, our guide outlines:
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Median New Zealand House Prices at 31 March 2023

The price of housing is in decline, as is clear from the REINZ report for 31 March 2023.

Cost of Building a New House (Data from 2022)

Interest.co.nz published comprehensive average build cost data in November 2021 which is user-friendly presentation of StatNZ data - you can access the report and tables here. The data is sourced from all council consent applications. Overall, the average cost per square metre is around $2,500 for houses and around $2,300 for apartments.

Disclaimer - The home building market is unstable and rising material prices may increase the average build cost. Nonetheless, the table below estimates what a new house will cost (excluding land and consent fees).
Location
Average Size
(Total Square Metres)
Average Cost to Build
Average Build Cost
(per Square Metre)
Auckland
212
$526,886
$2,482
Waikato
188
$456,101
$2,420
Bay of Plenty
172
$435,398
$2,526
Wellington
182
$522,943
$2,872
Canterbury
193
$413,623
$2,143
Otago
205
$605,315
$2,950
New Zealand Average
195
$479,271
$2,459

Why is it so Expensive to Build a Home in New Zealand?

There are numerous reasons; a list of some of the biggest contributors includes:
 
1. Land costs
  • Local and central government policy: Many restrictions are placed on land, making it uneconomic to develop. This, in turn, leads to the price of land increasing. Examples holding back land development include setback restrictions, land coverage requirements, resource consents and re-zoning of property. 
  • Resource Management Act - critics have argued this legislation is restrictive and creates cost and administrative burdens for anyone wanting to subdivide land. The government announced the act would be repealed and replaced in 2021, but its historical effects contributed to the scarcity in buildable land.
  • Lack of support for high-density housing - New Zealanders generally don't favour building small and high. There is still an expectation of one section per home. This limits new land coming onto the market for redevelopment. 
 
 2. Compliance costs
  • Building consents - The building industry have commented about how complicated, slow and expensive the consenting process is. Delays, reassessments and resubmissions all inflate the building cost. Building consents involve a lot of fees, and councils throughout New Zealand are happy to charge them. More costs should be expected to amend plans, gain a certificate of acceptance, or obtain a code compliance certificate.
  • As an example, a New Zealand Herald article in 2018 criticised the Auckland Council charging $69,000 in building consent costs, described as causing "excessive costs, inefficiencies and major delays".
 
3. Material costs
New Zealand arguably has a duopoly on building materials for home builds - Fletcher Building and Carter Hold Harvey. Sometimes they price fix too, as outlined in this 2014 NZ Herald article. Popular building material brands (for example, Placemakers, GIB, Pink Batts) are ultimately owned by Fletcher Building and usually favoured by New Zealand homeowners. Mitre 10 and Bunnings compete, but despite also selling brands manufactured by Fletchers, they don't have the dominance that Fletchers and its network enjoys. 
  • Fletcher Building, per its website, confirms its operations span "manufacturing, distribution and retail, home building, and major construction and infrastructure projects". This dominance makes new entrants in any area of home building arguably uneconomic.
  • Being geographically far away from the rest of the world adds further costs. New Zealand imports tiles, metals, adhesives, and many other things needed to build a house. This means that world material and shipping prices directly affect local building costs.
  • Many New Zealand sections have uneven contours. While this isn't an issue in Christchurch, Hamilton and other flat-land centres, uneven sections incur complex and expensive design, consents and foundation costs. 
 
4. Rebates
  • Unbeknown to most aspiring homeowners, builders may receive a "rebate" on the purchase price of goods from the company they buy them from. The aim is to keep builders loyal to a retailer (and specific products) by paying them rewards that the homeowner won't receive (unless the builder has adjusted the pricing to take account of the rebates).
  • A cursory LinkedIn search of a supplier relationship manager for one well-known building material retailer confirms his role involves liaising, managing and controlling supply "to maximize rebate potential." This behaviour, while legal, ultimately increases the cost of building a home as supplies end up costing more than they should.

George, a MoneyHub user, shares his experience:
"Rebates are generously rewarding building companies all over New Zealand. As a now-retired builder, I benefited from rebates for decades. I redeveloped my two rental properties and beach house, which were 100% paid for by rebates. It's a perk of being a builder, rewarded by the supplies company at the expense of the people paying you to build their home". 

5. Labour costs
  • New Zealand has a skills shortage, with 90% of construction firms having difficulty recruiting in New Zealand per this 2021 survey which means builders, architects, quantity surveyors, sub-contractors and day labour hires all end up charging more given the demand for their skills.
 
6. Other costs:
  • 15% GST is applied on all materials and labour costs. For example, this adds $45,000 to a quote of $300,000+GST.

Understanding Fixed-Price Contracts - (and why the definition of 'fixed' may be confusing)

Fixed-price contracts have long been used by homebuilders all around New Zealand and have protected both the buyer and the builder. However, the rise in costs has made standard fixed-price terms uneconomic and highly risky for builders who wouldn't be able to pass on constantly increasing building material costs without the introduction of escalation clauses. Per a recent RNZ news story, escalation clauses are now being inserted into fixed-price contracts. These clauses allow for increases in material costs to be passed on to the homeowner, creating additional financial risk. We understand more and more lawyers are seeing clauses that pass on cost increases to the buyer appearing in contracts.

Know this: Builders will only commit to a lump sum contract when the building plans are specific and no likely variations. The building contract will specify the build into specific stages. When each stage is completed, you will make the payment (and draw on the construction loan). A fixed-price contract is also known as a lump-sum contract. This means a fixed scope of work is agreed upon, and a deposit is paid. Generally, the sooner the deposit is paid, the faster the builder can order materials at current market rates.

Can I Sign a Fixed-Price Build to Protect My Costs from Soaring?

Yes. However, since material costs continue to soar, fixed-price build quotes are likely to be well above other builders who won't offer a fixed price. This is because the builder needs to estimate and absorb the risk of increasing material costs into the quote upfront. Furthermore, there may be clauses to limit the builder's risk.

My building company wants to increase the build cost after signing up for a fixed-price house package. What can I do?

This is frustrating but increasingly common throughout New Zealand as material prices skyrocket. The first step is to check your contract – does it allow for materials cost increases to be passed on?

If it does, it is best to ask the building company for evidence to substantiate how they came up with the increased costs. You will want to see specific cost increases that add up to the total proposed increase. A price increase under the Construction Contracts Act 2002 is defined as a ‘variation’ to the contract and needs to be calculated with regards to ‘reasonable value’ as outlined in s17 1(d). Therefore, the evidence you receive from the building company must meet that definition.

It’s likely most fixed-price build contracts signed since mid-2020 will have a clause to the builder to pass increases in material costs to the buyer.

If material costs go up 20% or 30%, does my total build price increase 20% or 30%?

In most cases, no. Increases in prices of materials do not proportionally hike up the cost of a home build. For example, if roofing materials increase by 15%, the total roofing cost won't increase by 15%. This is because the build cost also includes labour. So, in such instances, the price may increase 7.50% (where the cost is 50% labour and 50% materials), but not 15%, and certainly not any more than 15%.

How Can I Reduce the Building Cost Without Compromising my Dream Home?

Understandably, you see your home build as a 'forever home' and don't want to compromise on features you'll otherwise notice. However, cost savings can be made without impacting the overall aesthetic and health of a new home. Examples include:
  • Substitute imported (and expensive) cladding with cheaper locally produced cladding (an example is here)
  • Substitute floor tiles, engineered timber or other costly floor coverings with polished concrete
  • Large savings can be made on fit outs especially relating to bathrooms, kitchen and light fittings. There are many alternative options and products available and it pays to check out the prices whilst ensuring that the required functionality is not compromised.
  • Buy what you need in advance - supplies are not guaranteed, and you'll waste time and money if you're not ready. For example, fitting out your kitchen or bathroom without tapware, sinks, shower screens, baths etc., is a waste of time. The same goes for appliances that may need to be imported and therefore take extra time depending on what you need. Importantly, you'll need to find a place to store everything securely and manage the 'warehousing'. 
  • Consider removing extras and making them DIY projects later on - for example, fences, landscaping and other groundwork. If you're competent and can lay a concrete path to your standards, you can save money considerably.
  • Install the insulation yourself - it's an itchy project but doesn't need specialist training, and making it a DIY project saves hiring someone else or have the builder doing it. 
  • Paint your home inside and out - if you've got the DIY experience, you'll save a lot of labour costs. 
 
And, importantly, protect yourself by agreeing only to what you understand. Builders are increasingly inserting sunset and escalation clauses. This means a fixed price contract may not apply to the entire build - make sure you understand what you agree to.

Frequently Asked Questions

Can I get a live estimate of my building costs?

Yes - we suggest using our Home Insurance calculator, which the Cordell Calculator powers. This free tool is regularly updated and used extensively by the insurance industry to assess rebuild costs. It provides a good starting point. We also suggest looking at Stats NZ and using inserting a simple formula to get cost per square metre pricing. Our guidance note explains how to do this using the 'Building consents issued: (Month) (Year)'.XML file (as outlined here).

Can I build or place a temporary home/prefab on my land while I wait to build?

It depends on your plans, what covenants are in place over the land and the council consent requirements. For example, if you've bought a section on a new development with covenants or build guidelines that restrict "transportables", you won't be allowed. However, there's no standard answer - the best thing to do is to ask the relevant parties and see what you can and can't do. 

Will building costs in New Zealand ever come down?

Right now, it's a perfect storm for high costs: growth of land prices, a shortage of tradespeople, and a rise in building materials costs due to global supply constraints are all ongoing issues and existed before the 2021-2022 pandemic. Together, they have long been regarded as responsible for the jump in building costs. Materials are seeing a 20 to 25% increase over the last five years per this November 2021 Stuff.co.nz article. Experts believe that costs will continue to rise for the foreseeable future, meaning you should budget more than you expect to pay. This is bad news for anyone with bare land, drawing up plans or looking to build later on.

How can I get an accurate building cost figure?

To gain a reliable insight into costs, you will need to devise a building plan, including concept drawings, building materials, and relevant features. From there, a quantity surveyor should provide a precise estimate. It's near-impossible to get an accurate estimate without complete plans. Due to increased building costs, it's best to have a buffer for overruns. 10% of the total build budget should be the minimum.

What are the pros and cons of building new?

Pros:
  • Maintenance costs are very low (for example, you won't need to repaint, re-tile or reclad for many years to come). 
  • Your home has a Master Builders guarantee.
  • Most building companies will offer a weathertight guarantee to cover any 'leaky building' issues.
  • Your home comes with a healthy standard of living (which is desirable if you have children)
  • The home is built to your style and standards. 
 
Cons:
  • There's an absolute risk - the ever-increasing costs and the risk of running out of money because of soaring building costs. Not having enough money can financially ruin you if you can't afford to finish the build. 
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