Auckland Building Costs: What To Expect In 2022
What does it cost to build a new home in New Zealand in 2022?
We on average are building more houses but they are getting smaller, especially with the proliferation of many town houses being built on what was once a single site. Auckland remains the most expensive place to buy a property in New Zealand, with Wellington following close behind. The National average build cost in 2020 was $2360 per square metre and in 2021 was $2460. From 2021 to now, this cost has skyrocketed to an average price of $3500 per square metre and it is continuing to rise. This $3500 per square metre does not include the following costs:
- The costs involved in purchasing and obtaining the land (real estate agents, legal fees).
- The design (architects) and consent fees (Resource Consent and Building Consent) which can be anywhere between 5-10% of the overall build cost.
- Foundation and subfloors (concrete or timber and piles).
- Earthworks, drainage, retaining walls, septic tanks, retention tanks.
- Engineering and quantity surveying fees.
- Landscaping, fences and driveways.
- Services such as fibre, gas, electrical and water to the dwelling.
Five price increases in the last 7 months
In the last 7 months (since August 2021) we have had five price increases in material costs, fuel prices have pushed up freight costs for the delivery of materials, inflation is running at 5.9% and mortgage loan rates are sitting around 5%. Labour costs have also increased due to the shortage of skilled tradespeople. A Quantity Surveyor can work out the cost of a new build, but their figure is only as good as the data that goes into it.
When building consent applications are submitted to Council, the build value is often lower than the actual cost of the build. This is because the value of the cost of the build determines the cost of the consent fee. An architect may say the build cost is $2500 per square metre but the actual build cost is more like $3500 per square metre.
The cheapest build is a basic rectangle shaped house.
Items that will increase build costs are:
- Elevated sites
- High wind zones
- Unstable ground
- Large areas of glass (require steel portals)
- Anything that is canter levered (floors, roofs, walls and decks)
- Difficult site access
Be wary when comparing different building quotes
When comparing different building quotes, make sure you compare the same things (like for like) and be weary of cheaper quotes. These cheaper quotes have probably left out items that will be added later as a variation to the scope of works and you will still have to pay for it. Some building companies do this on purpose to secure the contract for the job then add all the extras at the end. A good rule of thumb is that you should allow 10% for unforeseen costs or changes to the plan. Due diligence is the key to streamlining any new build.
There are many benefits to a new build compared to purchasing an old established house. Firstly, the building will meet all the new building codes and standards. This means the house will meet all the requirements of the Healthy Homes Guarantee Act 2021 and will be dry, warm, double glazed and have a good, practical layout. Secondly, and most importantly, you get what you want, as it is your design.
Owners looking at quotes from perspective builders must take into consideration the many indirect (overhead) costs. Building companies must cover these costs month to month which are factored in as a percentage of each build. Some of these Indirect costs are:
- Project Management Fee (this fee consists of a percentage of the scope of the works, typically 5% of the cost of the project)
- Legal fees
- Accounting fees
- Website maintenance
- Office rent
- Administration staff/stationary/equipment
- Health and safety
- Human resources
- Vehicle maintenance
- Quote for the job
- LBP and Master Build Registrations
- Licences for the computer software
- Marketing and advertising
- Insurances (Public liability, Professional indemnity, Equipment, Vehicles, etc)
- Margin (profit)
The cost of building is getting more expensive
The cost of building is undoubtably getting more expensive as time goes on and these costs must ultimately be passed on to the owner. At the present time it is the perfect storm for increasing costs; as land prices are increasing, there is a shortage of trades people and due to global supply and constraints building materials are going through the roof. Then we have also had Covid-19 disrupting everything. At Villaworx Construction we believe that costs in general will continue to rise in the foreseeable future so if you are planning to build you should budget for more than you think that the cost of the build will be.