Malcolm Fleming: Certified Builders CEO on house building costs falling after more than a decade

Now could be the best time to build a house after costs fall for the first time in more than a decade.  

Corelogic's Construction Cost Index shows building costs have dropped 1.1% in the three months to June.  

It looks at the price of labour, material, plant hire, and subcontract services. 

Certified Builders Chief Executive Malcolm Fleming told Ryan Bridge that global supply chains are no longer disrupted.  

He says costs are returning to pre-pandemic levels while manufacturers and distributors are being more competitive. 

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Episode Transcript

Speaker 1 (00:00):
Right now, call logics called our Construction Price Index has
recorded the first drop in construction costs in twelve years
since the index started looking at prices. This should mean
that we get cheaper houses when we're building right Joining
me now is the new Zealand Certified Builders Chief executive
Malcolm Fleming. Malcolm, what does it mean?

Speaker 2 (00:20):
Look? The drop in building us means it's a great
time time for home book owners to consider a building project.
Global supply chains are no longer disrupted, so costs are
returning to where they were pre pandemic and falling demand
for building materials has led to manufacturers and distributives becoming
more competitive with they're product pricing. So home ruwners can

(00:42):
now be more discerning about the builder engage to set
their building project up for success. Home owners would be
insisting on a trade qualified builder is aligned to the
Trade association because they have a choice.

Speaker 1 (00:54):
Now, what does it mean for trade's wages? Are they
going down or are they just not rising at the
same rate?

Speaker 2 (01:02):
Wages generally have stabilized four point one percent was the
last on that in terms of statistics, there has been
a slow down and the wage rises generally a constant sector.
Material costs are coming down, as we've just been talking about,
and part of an example of that is manufacturers and

(01:22):
disputed distributors of building products are becoming more competitive. So
in action, what we're seeing is merchants approaching our members
about opening your accounts with them at attractive pricing, and
that's something we never saw costs twenty and twenty twenty two.

Speaker 1 (01:39):
This is all good news. Does this mean that we're
going to see cheaper that you first into the first
homes or new homes cheaper?

Speaker 2 (01:48):
I think we're going to see some of those costs
coming through. Another driver behind this as well as subcontractor
margins are under pressure as demand is for so subcontractor
margins are a lot higher and more elastic than a
builder's margin, and downward movement in that space has an impact,
and that's what we're starting to see now. So again,
a really good time for the homeland and consider a

(02:10):
building project.

Speaker 1 (02:10):
Malcolm, Thanks for your time. Malcolm Fleming with us this morning,
the New Zealand Certified Builders Chief Executive.

Speaker 2 (02:16):
For more from.

Speaker 1 (02:16):
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