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Diesel Price Rebound Piles Pressure on New Zealand Construction Costs, QV Says

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A rebound in diesel prices is putting pressure on construction costs in New Zealand in August, QV said in a report on Tuesday.

The average building cost per square meter for residential buildings rose by 1.1% in this quarter, raising annual residential building cost growth to 3.3%. The average building cost per square meter for non-residential buildings, excluding educational buildings, increased by 0.5% in the quarter and by 2% annually.

Higher diesel costs are feeding into trades such as excavation and demolition. Excavation costs increased by 4.3% in August, and demolition costs also rose by 3.7%. On average, trade rates increased by 0.5% from July to August.

"Fuel remains one of the most volatile inputs in construction," QV CostBuilder quantity surveyor Martin Bisset said, adding that diesel bounced back in August, and construction costs have moved higher as a result.

The broader picture is still one of modest growth, Bisset added. "Construction cost inflation is not running away, but neither has it disappeared."

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