Cost of building homes up 10pc
The cost of building homes in Canterbury has risen nearly 10 per cent in a year, with industry leaders warning prices will increase further.
Some in the sector said prices could rise 10 per cent or more in the next year given that the labour and material expenses associated with a new build have yet to increase.
So far inflation on new homes had been driven by two main issues: health and safety costs on site and costs associated with stronger foundation requirements on technical category 1, 2 and 3 land in Christchurch, one builder said.
Statistics New Zealand yesterday said inflation had hit a 13-year low of just 0.8 per cent in the year to September 30.
But in Canterbury, the increase in building costs was 9.6 per cent over the past year, compared with 3 per cent nationally.
Brent Mettrick, managing director of construction firm Stonewood Homes, said he was not surprised at the figures, and a further annual price rise of 10 per per cent was on the cards as materials and labour went up.
"I would suggest an easy 10 per cent will still occur," he told The Press.
House foundation costs had already risen in Christchurch due to new technical requirements, he said.
"For example in the [original] building code you could have built your slab without steel in it. It's now not only got normal steel, it's got ductile steel. That's a standard building code change which is quite acceptable, but there is a cost impact to this," Mettrick said.
There were also higher compliance requirements for health and safety at building sites, including the requirements of more fencing as well as a protective scaffolding ring around a house, and mesh netting on top of a house frame to protect builders as roof trusses were put in place.
Registered Master Builders chief executive Warwick Quinn said Cantabrians wanting to build homes could agree a guaranteed building price with their builder over a shorter "fixed-term" build time frame, say three months.
Builders could come to agreements with suppliers on materials and labour in the shorter term.
But if the price guarantee was for too long a period the builder could be caught in the middle, facing higher costs and even going bust. Many contracts had clauses allowing for the cost to go up to reflect price increases for materials.
"I think the risk in Christchurch is for people trying to lock builders in for long extended periods and then they're worse off at the end of the day. The builder starts the job thinking he can do it but he can't [finish]."
Westpac chief economist Dominick Stephens said he was concerned about further inflation emerging from Christchurch's reconstruction in coming months and spreading nationwide.
"That we've seen this level of construction cost inflation before building of new houses has even got under way is quite extraordinary and indicates there could be more to come," Stephens said.
GET OVER IT - EXPENSE IS JUST REALITY
The skyrocketing price of building a home in Christchurch is just the reality of living in the quake-hit region, says a Rangiora painter who has started building.
About six years ago, Murray Hawke bought a 1930s 65-square-metre cottage in St Martins. The property was badly damaged in the earthquakes.
Even though the Hawkes got an under-cap payment from the Earthquake Commission, they decided to build on the site.
Hawke was philosophical yesterday after Statistics New Zealand announced the increase in building costs was 9.6 per cent over the last year in Canterbury, compared with 3 per cent nationally.
"Get over it, live with it, pay it and move on. Prices are going up with demand."
The foundations had now been laid for a 110sqm house, which would become a rental property, Hawke said.
He said the he cost of building the house was already up by about $8000 because of increased demand for construction workers and the new earthquake code requirements.
But these increased costs were the reality of living in a city where the building industry was booming, he said.
Painters' prices had gone up about 15 per cent in the past 18 months, Hawke said.
He has signed a contract with Golden Homes to build the house and there was room for prices to change.