The country’s building sector has quietly posted its first annual lift in new home consents in three years, on the same morning Westpac was warning that the Middle East conflict had knocked New Zealand off course and Cotality was reporting that more than four in ten apartments are now reselling at a loss. The recovery is real, but it is also distinctly regional, and the economists looking at the numbers see clouds on the horizon as much as sunshine.
Stats NZ figures released earlier this month show that 37,700 new homes were consented in the 12 months to March 2026, up 11 percent on the previous year. It is the first annual increase since the year to March 2023, after three consecutive years of decline through the post-pandemic correction. The Q1 picture is stronger again — analysis published by interest.co.nz puts new dwelling consents for the January-to-March quarter at 9,373, up 14.6 percent on the same quarter a year ago and up 21.5 percent on two years ago. Consents are still 24 percent below their March 2022 peak of 12,333, but the trajectory has turned. The full month-by-month and regional series, with TLA-level drilldown, is tracked in our Building Consents by Region tool.
The lift is heavily concentrated in two regions. Auckland consents are up 14 percent on the year and Canterbury is up 21 percent. Both standalone homes and medium-density developments — townhouses, terraced housing and apartment blocks — have shared in the rise, suggesting the recovery is not just one type of buyer or developer coming back to the market.
Construction costs, the other half of any building-sector story, are running flatter than the headline inflation rate. The average build cost across the country in the March quarter was $3,229 per square metre, up 2.2 percent on the same quarter a year earlier but down 1.4 percent on the 2024 peak of $3,276. The average total build cost per consented dwelling came in at $453,406. Otago is the most expensive place to put up a house at $3,875 per square metre, followed by the Bay of Plenty at $3,446 and Wellington at $3,412. Canterbury is the cheapest of the main building regions at $2,815. Apartments cost the most per square metre to build at $3,453, while townhouses and units are the cheapest at $3,158. A breakdown of the input cost pressures behind those numbers — the producer price index for residential building, capital goods price index, and labour cost index — sits in our Building Input Cost Tracker.
Westpac senior economist Satish Ranchhod, looking at the same data, struck a careful note. While the amount of planned building work has lifted, headwinds in the building sector are mounting,
he wrote in the bank’s First Impressions note. Rising construction material costs flowing through from the Middle East conflict, higher fuel costs on every site, and the prospect of borrowing costs staying higher for longer all sit on the negative side of the ledger. Ranchhod’s read is that the recent momentum may flatten out again by year-end.
The non-residential side of the building sector tells a similar story. Non-residential consent values were up 1.2 percent over the 12 months, but floor space was up 8.2 percent — meaning developers are putting up more square metres of building per dollar than they were a year ago. That is consistent with cost discipline returning to the sector after a long stretch of margin compression.
The contrast with the rest of the May 13 economic news is sharp. Westpac yesterday cut its GDP growth forecast for 2026 to 1.5 percent, with unemployment now expected to climb to 5.6 percent. Cotality’s Pain and Gain report showed 43 percent of apartments resold in Q1 went out at a loss. Inflation expectations, per the RBNZ’s latest survey, have surged to 3.41 percent over the year ahead. Anyone reading the morning’s headlines would be forgiven for thinking the New Zealand economy is in retreat across the board.
The building consent numbers say otherwise. New dwellings are being planned faster than they have been at any point in the past three years, costs per square metre are holding, and the two regions doing most of the country’s heaviest population work — Auckland and Canterbury — are leading the way. Whether the Ranchhod forecast comes true and the lift fades through the second half of the year, or whether the recovery sticks, will tell us a lot about whether the country is genuinely turning a corner or just catching its breath between the inflation shock of 2022-24 and the energy shock of 2026.
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This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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