Pete Wolfkamp: Newstalk ZB's Resident Builder on house building costs stabilising

The cost of building a new home's starting to stabilise. 

Figures from QV CostBuilder show the average cost to build a three-bedroom home in main centres has risen by 1.8% for the year, and 0.3% this quarter.  

It compares to an annual average increase of nearly 5% last December, and nearly 10% last June. 

Newstalk ZB’s Resident Builder Pete Wolfkamp told Mike Hosking that the main difficulty builders were facing over the last years were prices rising after they’d been locked into a fixed term contract. 

He said that it puts enormous pressure on projects to keep their costs to a reasonable level, which was incredibly difficult. 

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Episode Transcript

Speaker 1 (00:00):
Got some better news on the housing front for you
this morning. The mad cost increases we've seen and building
dissipating prices were up one point eight percent for the year.
So compare that to the four point nine percent last
year and indeed the nine point five percent the year before.
Now Pete wolf Camp, host host of Resident Builder of Courses, Well,
there's Pete. Very good morning to you.

Speaker 2 (00:17):
Good morning to you. Do my case, sir, I'm well.

Speaker 1 (00:19):
Indeed, so not increasing the way it used to, that's
the good news, but still at very elevated levels though,
aren't they.

Speaker 2 (00:25):
Well that's the concern. Yes, that's great, one point eight annually,
zero point three in the last quarter, but the scary
numbers are back a little bit. And having discussions with
people in the industry, yep, they shot up. They go
up quickly, they come down very slowly, if they come
down at all. So you're still, you know, nine and
a half percent on let's say four and a half

(00:46):
thousand dollars a square foot for a residential build. You're
talking nine hundred thousand dollars for a house, plus another
eighty thousand on top at nine and a half percent.

Speaker 1 (00:56):
Sorry, you said four and a half thousand a square
what square foot or meter?

Speaker 2 (01:00):
Square meter? Doesn't it? Yeah?

Speaker 1 (01:01):
Sure so square meter four and a half thousand.

Speaker 2 (01:03):
But you're wear around here. Those numbers are dodgy.

Speaker 1 (01:05):
Yeah. I was going to say, because I've seen places
at twenty five thirty thirty five thousand dollars a square
meet at these new apartment buildings and stuff like that,
and I'm thinking, how does anybody afford any of that?

Speaker 2 (01:18):
Yeah? And I mean, look, that's at one end of
the sector. I think, you know, what they're trying to
identify is what's a typical New Zealand construction, you know,
mid range or slightly below range. Let's say, what's that
costing us per square meter? And those numbers have rocketed
up over the last ten years exactly.

Speaker 1 (01:36):
So when we talk about these average numbers at one
point eight percent a year, have things got under control
all that jib talk and the supply talk and the
competition talk. Has that settled down?

Speaker 2 (01:47):
Yeah? Very much so. So I think what was really
what was very difficult for people a couple of years
ago is that you know, you might quote for a job,
you'll have that price, accept that ben prices all riot
and you're locked in a fixed term contract and the
contract that often is the expense of that. That's probably
showing in some of the liquidations that we see. It's

(02:09):
also just put the nons pressure on all projects to
try and keep their costs to a reasonable level. And
that was incredibly difficult. So I guess that is good,
you know, but it's still extensive. That's the real challenge
for the same.

Speaker 1 (02:25):
Yeah, it is, where does it go this year? I mean,
you know, what what what? What are we seeing? Because
I mean, here's here's the disconnect. Immigration. A lot of
people coming into the country. Presumably there's some sort of
demand there for housing, but the housing or at least
the consents aren't what they were.

Speaker 2 (02:40):
We will continue to roll through the typical boom and bus.
Right So, right now, and this is kind of that
grassroots go out and search for a contractor right now, electrition, plumber, builder,
They'll aren't to the phone and they'll be around the
next day. Cast your mind to eighteen months ago, two
years ago. That was almost impossible. So everyone that I know,
for example, where let's say they weren't having the price

(03:02):
for work right if you could find a contractor you
just got them on site, got them underway. Suddenly everyone's pricing,
so those prices are a little bit chharper than they
might have been a little while ago. Certainly in terms
of supply yes, you're right, the jib that's been sorted out.
Containers that were being dropped and I don't know Sydney
for example, are making their way here. So some of

(03:24):
those supply line issues are definitely sorted out. Whether or
not the government policy around allowing the importation of building
materials that are very similar or have met standard that
are similar to our own makes some appreciable difference on
the left waiting team, Go.

Speaker 1 (03:41):
Mate, good to catch up with you appreciate it very much.
People can't be the host of Residents Builder.

Speaker 2 (03:46):
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