New Zealand home-building costs rise 1.7% as existing property values remain subdued

Cotality’s index of New Zealand residential building costs rose 1.7% in the September 2026 quarter, the fastest quarterly increase since late 2022, according to reports published locally on 8 October. The rise adds to the cost households must weigh when choosing between a new build and an existing home in a subdued property market.

The Cordell Construction Cost Index showed annual building-cost growth reaching 4.8%, up from 3.5% in the June quarter, interest.co.nz reported. That was the strongest annual increase since the June 2023 quarter and exceeded the reported long-term average of 4.0%. The figures describe a rise in an index, rather than a price that every buyer or builder will pay.

What Cotality’s building-cost index measures

The index tracks the cost of building a standard standalone, single-storey, three-bedroom, two-bathroom brick-and-tile house, RNZ reported. It provides a consistent measure of changing construction costs, but it does not quote the cost of an individual project. A household’s actual bill depends on the home it plans and the terms of its building contract.

The September-quarter increase followed three quarters in which costs rose by between 0.9% and 1.1% each time, according to interest.co.nz. Materials account for about half of the index and wages for about 40%. Other expenses include professional and consenting fees. That mix helps explain why changes in the price of building inputs can have a substantial effect on the overall measure.

When higher costs may reach new-home buyers

Cotality head of research Nick Goodall told RNZ that builders had absorbed some increases themselves or had been working under fixed-price contracts. After seven or eight months of cost pressure, he said, some of those increases were starting to pass through to end consumers. The available figures do not establish how the latest quarterly increase has been divided among builders, current customers and prices quoted for future work.

Cotality chief property economist Kelvin Davidson told interest.co.nz that pricing for upcoming work was beginning to rise. He said households considering a new build could face a different cost environment in the coming months. That is an assessment of what may happen to future projects, rather than a measured price increase for every new contract.

How existing-home prices affect the choice

The new construction figures arrive alongside a subdued market for existing homes. In its September housing chart pack, Cotality reported that its national Home Value Index fell 0.4% in August. It described Auckland and Wellington as sluggish, with Christchurch more resilient. Existing property values and new-build costs are different measures, but households considering either option must weigh both.

Cotality also reported 6,175 property sales in August, down 11.6% from a year earlier. That marked an eighth consecutive year-on-year decline in sales. The company said rising borrowing costs and economic uncertainty were weighing on housing-market momentum, while elevated listings gave buyers leverage across much of the market.

Davidson said relatively flat existing-home values and rising mortgage rates could make the changed cost equation difficult for some households. He suggested it could influence whether they undertake a new build or buy an existing property. The reports provide no count of households that have changed their plans because of the September-quarter cost rise.

Goodall told RNZ that the choice is not decided by the headline construction-cost figure alone. RNZ reported Cotality’s view that new builds have some financing-rule advantages, including exemptions from loan-to-value and debt-to-income restrictions, and may involve lower maintenance costs. Those factors can matter alongside the price and financing terms of a particular home; the reporting does not establish which option is better for an individual buyer.

What remains uncertain about construction costs

Davidson said further cost pressure could still move through the construction pipeline amid renewed global uncertainty. That warning concerns possible future increases. For now, the established change is the 1.7% rise recorded for the September quarter and the faster annual rate shown by the index.

The practical effect will depend on the price of upcoming work and the terms offered to households considering a build. Cotality’s figures show that building has become more expensive by its standard measure while existing-home values remain subdued. They do not yet show that buyers have shifted from new homes to existing ones.