Building costs hit 3-year high & the one-year rate surge

Residential construction costs have surged 4.8%p.a. - marking the fastest annual growth in three years. What does this mean for new builds and the wider property market? In this episode of the New Zealand Property Market Podcast, Head of Research Nick Goodall and Chief Economist Kelvin Davidson break down the Q3 2026 Cordell Construction Cost Index (CCCI). They discuss why builders are beginning to pass material and shipping cost increases on to households, and why this could cause buyers to choose existing homes over new builds. We also analyse the latest Reserve Bank of New Zealand (RBNZ) lending data, which reveals an increase in one-year fixed-term mortgage popularity. Kelvin and Nick explain why one-year rates (now sitting around 30% of new lending) are dominating three-year terms, and evaluate how this cost data will impact the next RBNZ Official Cash Rate decision. Chapters: 00:00 – New Builds vs. Existing Homes 00:33 – Q3 CCCI: Building Costs Accelerate to 4.8% 02:15 – Shipping, Materials & Steel: What’s Driving Construction Inflation? 04:00 – Buyer Substitution: Will Consents Finally Slow Down? 05:01 – Construction Inflation vs. Broader CPI: The RBNZ Threat 08:39 – New Lending Data: The Shift to One-Year Fixed Rates 10:40 – Why One-Year Special Rates under 5.0% Are Dominating the Market 13:46 – OCR Projections: Is a 3.25% or 3.50% Peak Ahead? 16:39 – 10-Year Value Release Preview & Suburb Growth Analysis 18:45 – Hanmer Springs, Molesworth Station & Holding the Bledisloe Cup! Subscribe for weekly research-led property market insights from Cotality.