Rising building product prices will increase new home costs

Building product prices are rising, which is expected to increase costs for new homes. Generation Homes, a leading home builder, reported that suppliers are raising prices for key materials like cladding, insulation, plasterboard, and flooring by 3 to 7 percent. Popular products have seen notable price hikes. For instance, Pink Batts insulation went up by 4 percent, and prices for GIB plasterboard have increased by 3.9 percent this year. Builders were informed about these changes last year. The rise in material costs comes as demand for new homes remains low, largely due to high interest rates keeping potential buyers away. Craig Hopkins, the CEO of Generation Homes, mentioned that these increases could add an extra $20,000 to $30,000 to the cost of a typical new house. While not a huge percentage increase, this added amount can significantly impact buyers who are already navigating strict bank lending requirements. Fletcher Building, the owner of brands like GIB and Pink Batts, noted that the price rise for Pink Batts was necessary due to inflation and rising electricity costs. They emphasized their desire for stable building supply prices but acknowledged that economic factors, like a weaker New Zealand dollar, make it challenging. While competition could benefit the building sector, Hopkins warned that the government's efforts to import products from abroad may not have immediate results. He pointed out that creating an efficient distribution system in New Zealand would take time and could be costly.