Construction costs just keep going up and up...
It's no surprised really in this economy, is it?
In recent weeks, construction companies and developers around the country have folded amid the pressures plaguing the building industry.
This produces a huge worry for many in what is to come for the construction industry in the coming months.
A number of factors are combining to create a perfect storm in the building sector. Inflation, a shortage of materials, the extremely high volume of construction, the shortage of labour, the challenges of gaining access to finance and ongoing impact of the pandemic have all combined to exacerbate legacy issues that have long simmered under the surface.
Anne Gibson from NZ Herald says “The impact has left many businesses struggling to make ends meet at a time when the industry is booming. The stories reported thus far in the media appear to only be the tip of the iceberg when it comes to the struggles across the industry.“ The high price of building materials in New Zealand has again raised questions about the concentration of market power among a small number of large organisations. It's been reported that 94 per cent of the GIB market controlled by the GIB board, 89 per cent of the glass wool supply controlled by three firms, and just two companies control 85 per cent of the concrete industry.
The cost of building a new home is rising at its fastest rate on record but signs of relief are emerging on the distant horizon.
Property research firm Core Logic's Cordell Construction Cost Index (CCCI), which measures the cost of building a 'standard' three-bedroom brick and tile house, rose by a record 3.4 percent in the three months ended September, compared with a 2.6 percent increase in the prior quarter.
The annual growth rate also hit an all-time high of 9.6 percent, eclipsing the previous record set in the second three months of the year.
“This easing in cost growth will be very important in the longer term so developers and households aren’t dissuaded from taking the new-build path which critically assists in boosting overall housing supply”, CoreLogic notes.
Looking ahead, It’s not surprising if costs rose by double digits by the year's end before easing in 2023. Look at the price of diesel!
It is so crucial to have ALL your T’s crossed and I’s dotted before handing out quotes. This, we can certainly help with. Reach out to us today for a quick chat or fire your plans through for a no-obligation quote. You might be pretty surprised on our pricing vs. your time…