After a prolonged period of relatively subdued cost growth, New Zealand’s residential construction cost index is moving again. The Cordell Construction Cost Index, published by Cotality, recorded a 0.9% increase in the fourth quarter of 2025 — the largest quarterly rise since the third quarter of 2024. Annual growth reached 2.3%, up from 2.0% in the previous quarter.
Both figures remain well below the long-term average of 4.1% recorded since late 2012, and significantly below the post-COVID peak that exceeded 10% in late 2022. But the direction of travel is clear: cost growth is returning as demand recovers, and project budgets that were prepared during the quiet period need to be reviewed.
What Is Driving the Increase
Consent volumes are the leading driver of the cost outlook. Nationally, more than 35,500 homes were consented in the year to October 2025, with the year to November reaching 35,969 — a 7% increase on the previous year. The forward pipeline of committed work is increasing, which puts upward pressure on trade availability and, as a result, on pricing.
Multi-unit housing is leading the consent recovery, with townhouses and apartments making up a growing proportion of the pipeline. This type of construction has different cost dynamics from standalone residential work, tending to use different trade mixes and supply chains, but the volume effect on overall sector capacity is real regardless of dwelling type.
Regional Concentration
Growth is concentrated in a handful of regions. Auckland, Canterbury, Otago, Wellington, and Waikato are driving the majority of new activity. The previous consent peak of more than 51,000 homes in the year to May 2022 remains well above current levels, suggesting meaningful headroom before the market approaches the supply constraints that drove extreme cost growth in that period.
Implications for Project Budgets
For developers, builders, and their clients preparing project budgets, the shift from a low-growth to a recovering-growth environment means that contingencies and escalation allowances that were reduced during the quiet period need to be rebuilt. The pace of recovery is gradual enough that dramatic cost movements are unlikely in the near term, but the trend is established and budgets prepared on the assumption of flat costs will progressively understate likely outturns.
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