Industry Recovery Fuels Demand Resurgence as New Zealand Construction Costs Hit 15-Month High

As the construction industry begins to recover, New Zealand's residential construction costs in the fourth quarter recorded the largest increase in 15 months. Real estate consultancy CoreLogic stated in Wellington on Wednesday that construction costs in the fourth quarter rose by 0.9% quarter-on-quarter, higher than the 0.4% increase in the third quarter. This is the highest level since the third quarter of 2024 but still below the long-term quarterly average of 1%. Falling interest rates and rising business confidence are beginning to stimulate demand for new homes. Building permit approvals in the third quarter approached a three-year high, and this renewed momentum is starting to consume idle capacity within the industry, which may drive up material and labor costs. CoreLogic's Chief Property Economist Kelvin Davidson said, "The recovery we are now seeing aligns with some anecdotal evidence that builders are getting busy again."