Tag: Industry

Blog

Construction Outlook 2024

What a positive construction outlook in New Zealand (NZ) to start 2024!

As indicated by the CoreLogic Cordell Construction Cost Index (CCCI), construction costs are rising at the slowest rate in seven years as the heat comes out of the residential sector.

See construction costs and outlook trends.

What is the Cordell Construction Cost Index?

The Cordell Building Indices (CBI) are a series of construction industry index figures that are used to
monitor the movement in costs associated with building work within particular segments of the industry.
The CBI indicates the rate of change in prices within particular segments of the New Zealand construction industry. The changes in prices are measured daily through the use of detailed cost surveys, and are reported on a quarterly basis. This ensures the most current and comprehensive industry information available.

Each index is based on a combination of labour, material, plant hire and subcontract services required to construct buildings within the particular segment being measured. The CBI measures the change in the cost of constructing buildings, and as such do not provide the actual costs.

The indices are based on a comprehensive collection of labour, material, plant hire and subcontract
costs covering all major trade categories within the segment being measured.

Each of the trade categories contains labour, material and plant hire costs combined in typical
proportions required to construct the various types of buildings commonly found within each segment.

Builder on the tools with tool belt.

1) Slower Growth in Construction Costs

The construction industry is experiencing a slowdown in cost increases, with the rate of growth at its lowest point in seven years. In the fourth quarter of 2023, construction costs rose by 0.8%, slightly higher than the previous quarters but still below the long-term average.

2) Cooling Residential Building Sector

The residential building sector is cooling, contributing to the deceleration in construction costs. The industry is facing less pressure on overall capacity compared to the peak at the end of 2022, suggesting a more balanced market.

3) Material Supply Chain Dynamics

Material supply chains are easing, with stabilising timber prices and even modest falls for metal products. This could positively impact construction projects, as the availability and affordability of materials are crucial factors in cost management.

4) Industry Pressure Reduction

The industry is currently experiencing less pressure, and builders are not as over-stretched as they were at the end of 2022. This suggests a more manageable workload for construction professionals, potentially leading to improved project timelines and quality.

5) Potential Impact of Net Migration

The surge in net migration may help restrain the pace of wage growth in the construction sector. This could be a factor in controlling overall cost growth, as salaries constitute a significant portion of the total cost of a new build.

6) New Dwelling Consents and Future Supply

The decline in new dwelling consents suggests a softer phase of activity that could persist. However, demand incentives, such as lower deposit requirements for new-build properties, could encourage developers to continue bringing forward new projects. Increasing housing supply is seen as essential for controlling housing affordability in the long run.

Overall, the current outlook suggests a more stable and balanced construction environment, providing an opportunity for prudent planning and strategic decision-making.

In a nutshell, it’s the perfect time to start your new home building journey.

Our team are always happy to answer any questions you have when it comes to designing and building your new home. Contact us today,

Read more here:
https://www.stuff.co.nz/business/133542346/construction-cost-increases-hit-7year-low-as-residential-building-sector-continues-to-cool

https://www.corelogic.co.nz/news-research/reports/cordell-construction-cost-index

Blog

Energy Efficiency H1 Update

Understanding Energy Efficiency (H1) Requirements

The Ministry of Business, Innovation and Employment (MBIE) has updated the Energy Efficiency (H1) requirements for insulating new homes and commercial buildings in the NZ Building Code. The purpose is to reduce energy needed to heat new buildings by up to 40% and help make them warmer, drier & healthier, with less impact on the environment with significant changes taking place firstly in November 2022 and a further set of requirements beginning from May 2023.

The H1 Clause of the Building Code regulates the energy efficiency of the built environment – covering wall, floor and ceiling insulation, as well as the thermal performance of windows and doors. There are major increases in thermal performance requirements across the building envelope, indicated through higher construction R-values for different building elements.

New Climate Zone

With a focus on energy efficiency, these H1 updates are explained by the introduction of additional climate zones. This will allow the insulation requirements to better reflect the different temperatures experienced through the different regions within NZ:

New housing and building under 300m2 insulation requirements

The new housing and small building insulation requirements are the same. The only difference between them is the transition date for the new final values to come into effect.

For ‘Buildings under 300m2’, the new requirements came into effect on 3 November 2022. For housing, the new requirements were pushed back for six months, meaning they come into effect on 1 May 2023.

The only exception is category is ‘windows and doors’, which retained its original two-stage implementation – with the first on 3 November 2022 and the second on 2 November 2023.

The 5th editions of H1/AS1 and H1/VM1 include new methodologies for establishing the thermal resistance of windows, doors, skylights, curtain walling and slab-on-ground floors. From 3 November 2022, only the new methodologies can be used (with the exception of slab-on-ground floors).

However, until 1 May 2023, building consents for ‘Housing’ can use the “old” minimum construction R-values for roofs, walls and floors – those in the 4th editions of H1/AS1 and H1/VM1.

Below is an overview of the minimum R-values for each building element for housing in H1/AS1 and H1/VM1:

Minimum R-values for each building element for housing in H1/AS1 and H1/VM1

OptionsClimate Zone
123456
Roofs
Current minimum requirementsR2.9R2.9/3.3R3.3
1 May 2023R6.6
Walls
Current minimum requirementsR1.9R1.9/2.0R2.0
1 May 2023R2.0
Floors
Current minimum requirementsR1.3
Slab-on-ground floors 1 May 2023R1.5R1.5R1.5R1.5R1.6R1.5
Other floors 1 May 2023R2.5R2.8R3.0
Windows & Doors
Previous minimum requirementsR0.26
3 November 2022R0.37R0.37R0.37
1 May 2023R0.37R0.46R0.50
2 November 2023R0.46R0.46R0.50

It’s important to note that meeting these R-values is based on using the Schedule Method for compliance. See more on the Schedule method and when it can be used HERE. When using the Calculation or Modelling method, individual construction element R-values may be higher or lower depending on several variables.

Buildings more than 300m2

The new requirements for large buildings aim to reduce the emissions and energy used when heating and cooling a larger building by 23% on average over previous minimum status quo requirements.

This overview of changes applies to ‘Buildings greater than 300m2’, including but not limited to buildings classified as offices, retail, schools, hotels, restaurants, etc. The specified area – greater than 300m2 – is based on the occupied space of the building.

These changes only affect new construction or existing properties undergoing changes to the external thermal envelope, which will require a building consent.

Industrial buildings are not currently required to be energy efficient so sit outside the scope of this work. However, if there was an office within a warehouse, or an industrial building, that office would have to comply with the updated requirements.

What’s changed?

MBIE changed the roof, window, wall and underfloor insulation requirements for buildings larger than 300m2. These changes are outlined in the table below.

Increases in minimum R-values for large buildings

OptionsClimate Zone
123456
RoofR3.5R4.0R5.0R5.4R6.0R7.0
WindowR0.33R0.33R0.37R0.37R0.40R0.42
WallR2.2R2.4R2.7R3.0R3.0R3.2
UnderfloorR2.2R2.2R2.2R2.4R2.5R2.6

Sources:


Bunnings Warehouse – https://trade.bunnings.co.nz/campaign/healthy-homes-h1
Placemakers – https://www.placemakers.co.nz/online/building-code-update-energy-efficiency-h1
Building Performance– https://www.building.govt.nz/building-code-compliance/h-energy-efficiency/h1-energy-efficiency/#jumpto-updates

Further reading:

MBIE – https://www.mbie.govt.nz/about/news/new-building-code-requirements-bring-biggest-energy-efficiency-change-in-over-a-decade/