Page 8 - HW June 2019

hard news
Does the Deloitte report put to bed the issue of home building costs?
LAST MONTH, THE supply side of the industry welcomed the release of a Fletcher Building-commissioned report by Deloitte Access Economics that we first started hearing about last year.
The report – Cost of Residential Housing Development: A Focus on Building Materials – addresses the costs of residential development on both sides of the Tasman.
Using robust third party data, Deloitte sought to quantify the key drivers to
the cost of new residential housing development across a range of home types in Australia and New Zealand.
The report also sought to explain the cost differences between residential housing in Australia and New Zealand and to what extent the structure of the New Zealand market drives the cost of building materials.
In terms of the cost of building a home in New Zealand, the report concludes that the cost of land and infrastructure
have a greater impact on built cost than materials or products.
In terms of trans-Tasman costs, the report puts it that builders’ margins and GST are the key drivers for the cost differences between Australia and New Zealand.
Fletcher Building CEO, Ross Taylor, summarises: “When you break down the costs of residential development costs in New Zealand, land and infrastructure is the most significant cost at up to 35%.
“Building materials are up to 24%; and GST, government taxes and charges contribute up to 21%. These are the top three costs. Labour is a close fourth,”
Of the much talked-about trans- Tasman cost comparison, Deloitte Partner, Linda Meade, explains: “It’s generally cheaper or similar to build in New Zealand than Australia if you compare the same house design.
“However, due to the fact Australia builds more standardised houses, has lower GST, and does not have as stringent seismic, fire and façade requirements
as New Zealand, building in Australia is cheaper.”
6 NZHJ | JUNE 2019
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