Introduction
Although the nationwide median house price fell by 1.28% compared to the same period last year, Auckland saw a 4.8% increase. According to RNZ, the cost of building a new house dropped 1.1% for the first time in over a decade. Rising demand for new homes in Auckland, coupled with falling building material costs, is driving the new home construction market. However, before starting, the most crucial step is to accurately calculate the cost. This blog will guide you on how to effectively control building costs.
Understanding the Major Costs of Building a New Home
Land cost
The first step for New Zealanders entering the property market is selecting and purchasing the right undeveloped land. This process is not without risk, as time and cost can be significant. For detailed information, refer to our blog on how to choose land.
Design and planning cost
Due to different parameters in a project, such as slope, site access, proportions, ground conditions, site orientation, neighbouring properties, and specific customer requirements, a well-prepared design and plan are essential to help avoid going over budget. Proper planning ensures that parameters are effectively addressed from the outset, reducing the risk of unforeseen costs and ensuring the project stays within financial limits.
Building cost
According to the latest research, a Budget of $4000 per square metre is an absolute minimum in NZ. However, due to the complexity of house construction (see our knowledge on building stages), construction costs vary depending on the builder’s expertise.
Government regulation fees
The government will charge regulation fees during the construction, like the Building Research Association of New Zealand (BRRANZ) and the Ministry of Building Innovation and Employment (MBIE) levy. When the floor area exceeds a specified area, the government will charge an additional Development Contribution fee.
Key Strategies to Control Building Cost
Land Choosing
Land choosing is the first important decision when building house in NZ. Location, Topography and Type of soil are main things need to consider when choosing land.
Location
Selecting the right location is crucial for managing building costs effectively. The location of your site impacts various cost factors, including accessibility to utilities, transportation, and amenities. Proximity to essential services can reduce long-term expenses related to travel and infrastructure. Additionally, the character of the neighbourhood—such as its privacy, noise levels, and overall appeal—affects your living experience and can influence property value.
Thoroughly researching the location helps you identify potential cost implications. For example, the higher costs associated with distant amenities. Understanding local climate conditions and potential hazards, like flooding or erosion, allows you to plan for additional expenses that might arise. This is where expertise becomes invaluable. At Ploceus Building, we bring a wealth of knowledge and experience to guide you through this intricate process.
Topography
Because of New Zealand’s varied topography, building on a slope is very common. In such cases, earthworks and retaining walls on steep sites can cost hundreds of thousands, as the house must still be constructed on a level foundation, regardless of the slope. Choosing flat land can help reduce these construction costs. However, sloping sites often offer better views, which is an appealing trade-off.
As experienced builders, we have completed numerous projects over the years on a wide range of challenging sites.
Type of soil
New Zealand has many soil types; we break down three common soil types and their impact on building foundations.
First is Volcanic soil. Volcanic soils are nutrient-rich and ideal for agriculture but can settle with moisture changes, necessitating a stronger foundation. When building on volcanic soil, more spending is needed on strengthening the soil.
The second is Clay soil. Clay soil has a high water content and can expand or contract significantly with moisture changes, leading to potential foundation shifts. In New Zealand, pile foundations are recommended for clay soil, as they transfer the building’s weight to more stable soil layers deep below the surface.
Third is Sandy soil. Sandy soil is prone to shifting and erosion, making it challenging to maintain a stable foundation. Its low bearing capacity often requires a deep, reinforced foundation. If the soil is well-compacted with low moisture content, a concrete slab foundation may be suitable.
Choosing easy soil and customising building solutions to different land types can effectively control costs
Design Improvement
Flow
Creating a well-designed flow is essential for both comfort and functionality. A good flow allows for easy movement between rooms, making daily life smoother and reducing the need for frequent furniture adjustments. It involves thoughtful room placement and seamless connections between spaces, ensuring a cohesive transition throughout your home.
Moreover, a well-planned layout can impact cost-effectiveness and overall value. Maximising natural light and ventilation enhances energy efficiency and reduces long-term expenses. This type of design also minimises the need for future renovations, saving on potential remodelling costs. Additionally, a thoughtful layout simplifies construction, reducing labor and material costs, while boosting the home’s resale value, making it more appealing to future buyers.
Efficiency
In New Zealand, 22% energy resources are from geothermal which is the second largest source of energy. When you design a house, using energy-efficient equipment and sustainable materials to a greater extent will reduce future maintenance and operating costs. For example, if you design electric equipment such as the electric heater or water heater in your home based on geothermal. Upfront and maintenance costs are high, but in the long run, electricity is cheap.
Material selection
The selection of construction materials is important in determining the overall budget. Premium materials and finishes typically come with higher costs, impacting expenses across various aspects, such as the foundation, roofing, insulation, flooring, and fixtures. When working with a limited budget, opting for emerging brand materials may be more cost-effective than choosing the main brand. However, selecting high-quality yet reasonably priced emerging brand materials is essential.
Partnering with an experienced builder like Ploceus, who has strong connections with material suppliers, can make the process more efficient and help ensure you get the best value for your investment.
Efficient project management
Efficient project management involves strategic planning, coordination, and supervision of a construction project to ensure it is completed on time, within budget, and meets quality standards. This approach helps reduce costs by optimising resource allocation, controlling expenses, and enhancing overall productivity. For example, a skilled project manager would use construction management software to track labour hours in real time. Noticing that a specific task was taking longer than expected, they promptly reassigned workers and adjusted the schedule, preventing delays and avoiding additional costs. This proactive management allowed the project to stay on track, avoid overtime costs, and ultimately come under budget.
When choosing a builder skilled in efficient project management, it’s important to assess your builder’s past performance, particularly their experience in managing time, controlling costs, and ensuring quality.
Common Potential cost and How to Avoid them
Choosing a builder without a thorough understanding and control over all aspects of expenditure can lead to unexpected costs. That’s why having a fixed-price contract is essential before committing to a construction company. Such a contract typically includes detailed specifications of the work, the materials to be used, and a timeline for project completion. It protects you from potential cost overruns by locking in the price from the start of the project. Reputable builders are confident in offering fixed-price contracts, ensuring transparency and peace of mind for their clients.
In addition, construction delays will lead to additional costs as well. For example, immature builders often do not have a confident management team, and when errors occur frequently, schedules will delayed, resulting in additional costs.
For more details on hidden costs, check out our blog.