New Zealand homebuilding expenses recently hit record highs in the first quarter due to on-going timber and construction product price hikes, according to CoreLogic New Zealand, after construction costs rose 2.4 per cent in the three months through to March.
The hikes outperformed the quickest gain of 2.2 percent in the second quarter of 2021, according to CoreLogic New Zealand, after costs surged 7.3 per cent from 12 months earlier. This is the quickest gain recorded since 2013.
The surging construction costs are leading to New Zealand’s inflation to also increase with Reserve Bank Governor Adrian Orr saying he also expects interest rates to keep rising as the central bank seeks to contain inflation expectations.
Wages also continue to climb, according to CoreLogic, as firms work to full capacity in an effort to meet the unprecedented demand.
CoreLogic’s Chief Property Economist Kelvin Davidson said in a recent Bollyinside report that while higher costs and rising interest rates may prompt some to forgo new builds, there is unlikely to be much respite for the construction industry.
“Simply based on the pipeline of dwelling consents already approved builders will be busy for some time to come yet. I would not rule out a period of double-digit cost inflation into next year,” Mr Davidson said in the report.