Buying guide
What's the cheapest way to build a house in NZ?
Building a new house in NZ doesn’t have to cost a fortune - here’s how you can do it cheaper.
Last updated: 1 February 2024
The average new home in New Zealand cost $442,132 to build, according to Canstar. And if you want a large build with premium finishes, and non-standard design - chances are your new home could cost much more.
With that said, your new build could be affordable if you build smart. To get you started, these are the cheapest ways to build a house in NZ.
How to reduce the cost of building in NZ
Start with the contract
When you hire a builder to build your home you’ll need to sign a contract (which could end up being the most important part of the entire construction process). It’s a great idea to have an experienced lawyer look over your contract to ensure the terms are fair and favourable and to raise any red flags. Your lawyer should also be able to help you understand the contract - and it’s important that if you don’t understand it, that you DO NOT sign until you do.
Fixed price contracts are usually more appealing as they give buyers a clear understanding of costs before the build starts. However, it’s important to watch out for escalation clauses. These enable builders to pass on cost increases to the buyer at any stage during the build to protect them from material inflation. And while a fixed price may sound good, if it doesn’t include escalation clauses, builders may add an extra margin to fixed price contracts to protect them from the risk of materials costs rising.
Buy cheaper land
The largest cost when building a home is buying the land, so the simplest way to reduce the cost of any build is to purchase cheaper land. To do this, look to buy in a more affordable location or buy a smaller section.
Be wary of sections that are cheaper because they are sloping or near an environmental hazard such as a flood plain. These may cost less up front, but they could increase the cost of your build.
Build on a flat section
Building on a slope is far more complex and time consuming than building on a flat section. To build on a slope the section will either need to be cut and levelled, or you’ll need to design the building to fit the slope using poles, cantilevering or split levels. This will increase costs of your build - by about $20,000 for every metre of slope, according to G.J Gardner Homes.
Use standard plans
The rule when building is that customisation costs, so go for standard plans instead. Group home builders offer a wide selection of plans, some of which even include standard cost estimates on their websites.
Flat sections are generally much cheaper to build on.
Consider materials, fixtures and fittings
You have a wide variety of choices when considering stuff like cladding, windows, benchtops, tiles, door knobs and carpets. And these items could make up a substantial proportion of your build costs, so try your best to choose the cheapest options. Here are a few tips:
- Consider polished concrete instead of tiles or engineered timber.
- Go for cheaper local options for things like tiles and cladding instead of expensive imported ones.
- Buy fittings, fixtures and appliances in advance to avoid supply issues and cost increases.
Do it yourself
Building your home yourself could be a smart way to significantly reduce costs, if you’ve got the time and the skills. If you do this it’s important to factor in the cost of taking time off work, to be honest about what you’re capable of doing, and avoid biting off more than you can chew.
Another option is to partially contribute to the build. For example, some kitset home builders will supply trades and leave parts of the build to you in order to offer a cheaper service. If you’re not confident enough to build a home you could do the easier stuff, like fencing, landscaping, insulation and exterior/interior painting.
Build smaller (or try a tiny home)
The average cost of building a home in New Zealand was $3,145 per sqm between January and August 2023, according to Canstar’s analysis of resource consents. That means that if all things are the same and you build the average NZ home, adding even a tiny bedroom could cost well over $30,000. Going for a 150 sqm home instead of a 100 sqm home could cost more than $150,000 extra.
The point is, smaller homes are generally cheaper to build. You could take this idea a step further and build a tiny home, which are becoming more and more popular as the cost of building and housing continues to increase.
Use a flat pack or kit set builder
Modular, kit set or flat pack homes are almost always cheaper and quicker to build than regular homes (and they may be easier to build if you fancy doing it yourself). In fact, a basic one bedroom kitset can cost under $100,000 (excluding GST) and even a small three bedroom home can be built for under $150,000.
More premium, design led options may cost north of $250,000, but they’re still significantly cheaper than regular builds.
By building a contigency fund into your plan you protect yourself from budget blowouts.
Plan for the worst
While we can hope for the best it’s always best to plan for the worst. When it comes to building, that means selecting your builder carefully, getting a lawyer to check the contract and setting aside at least 10% of the build cost to cover potential cost increases.
With that money saved you’ll protect yourself from financial difficulties if the build’s costs increase and ensure that you can finish your home drama free.
*We hope this article has provided some helpful information. It's based on our experience and is not intended as a complete guide. Of course, it doesn’t consider your individual needs or situation. If you're thinking about building property, you should always get specific advice.
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