Mike Blackburn: Blackburn Management Owner on the increase in building costs in the last four years

Building costs have gone through the roof. 

A new QV CostBuilder survey revealed a significant increase to costs over the last four years. 

It looked at the comparative costs of a standard 150m square home over six main centres, and revealed an average increase of 44%. 

The biggest increases were seen in Palmerston North, Dunedin, and Wellington. 

Blackburn Management’s Mike Blackburn told Andrew Dickens that most of the increase would have occurred during the 2021/22 period when the pandemic was causing problems with the supply chain. 

The good news, he says, is that in the last 12 months, the average cost increase on a square metre basis was on 3% across the entirety of New Zealand. 

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Episode Transcript

Speaker 1 (00:00):
The New qv Cost Builder study shows that there has
been a huge increase to building costs over the past
four years. The study looked at the comparative cost of
a standard one hundred and fifty meter square home over
six main centers. The average increase was described as staggering.
The number is forty four percent four percent more expensive
than four years ago. Biggest increases part of the north

(00:22):
Tonedin and Wellington. Mike Blackburn or Blackburn Management, is a
construction analyst and joins me, Now, how are Mike.

Speaker 2 (00:28):
Good morning, Andrew, how are you.

Speaker 1 (00:30):
I'm good. I remember the great JIB crisis, during the
COVID and of course at supply chain crisis, but then
I thought we got over that. So where are all
these costs coming from?

Speaker 2 (00:40):
Well, look, Andrew, you are absolutely correct. So because this
report does cover that four year period back to twenty
twenty one, the most of those increases would have occurred
during that twenty twenty one and twenty twenty two period. Look,
the really, really good news is is that the last

(01:00):
twelve months, the increase and I measure this on a
cost per square meter basis, the increase across average across
all of New Zealand is only three percent, so the
bulk of those increases occurred during that period. Now, also
bear in mind is that during that twenty twenty one
and twenty twenty two period we actually went through the

(01:23):
biggest building construction boom that New Zealand has ever seen.
And of course from twenty twenty two through to twenty
twenty four, building consent numbers have fallen away quite significantly.
And of course the feature of the construction industry is
that as the market gets quieter, builders merchants and builders

(01:43):
and developers become a lot more competitive. So we certainly
had seen a significant slow down in the increase in
the cost of building over this last two year period.

Speaker 1 (01:56):
Yeah, but it's still forty four percent more expensive than
it was four or five six years ago. Someone has
to hold that cost. Now, just looking at the products
we import a lot of products. Should we do that less?
Should we be making more?

Speaker 2 (02:08):
Well? Look, look, a large percentage of building materials are
manufactured here in New Zealand, or at least from raw materials.
We sort of see a lot of all the aluminium
windows are sort of assembled here in New Zealand. Obviously,
timber framing a lot of that sort of stuff. One
of the things that the proposed new government legislation is

(02:31):
looking at doing is looking at making it easier to
bring alternative products into New Zealand so that we're not
limited to just the handful of products that are currently
coming in. And of course all of these things will
contribute to making it easier, simpler and cheaper to build.

Speaker 1 (02:48):
All right, Mike, I thank you. Mike Blackburn. He's a
management consultant business advisor, works across business companies and developers
and professionals, and each month Mike produces a variety of
detailed reports and analysis of all sorts of building cons
and activity.

Speaker 2 (03:01):
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