Manawatu Property Investors' Association

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20-02-2014

Construction costs increase

Landlords.co.nz

Rising housing construction costs will underpin the prices of existing homes, BNZ’s chief economist says.

Average residential construction costs rose 1.1% in the December quarter to sit 4.5% higher than a year earlier.

Tony Alexander said the price escalation was at odds with what was happening elsewhere – transport equipment prices fell 1.2%.

“House construction costs are going up and this will be another factor underpinning the prices of existing property. Will you contemplate getting a house built rather than bidding for the simplicity of an existing one when you know costs stand a high chance of coming in a lot higher than you may currently be budgeting for?”

He said the increase in construction activity could also affect quality as the demand for builders increased, which would put people off building new.

“Will you build when once again quality issues are coming to the fore as the bottom of the tradies barrel once again starts to get scraped and anyone who thinks they can wield a hammer gets into the building business?”

Source: Landlords.co.nz

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