What CoreLogic tells us about construction costs right now

We work with Aotearoa’s largest property database, CoreLogic, to get accurate valuation data and leverage their insights to inform business decisions. 

The latest data from CoreLogic shows that 99.1% of properties sold in the last three months sold for more than the original purchase price. While house prices are expected to cool somewhat, CoreLogic predicts that the construction industry will stay busy for some time. This is due to record high consents and material shortages caused by disrupted supply chains.  

In fact, construction costs have increased by 5.5% in the past 12 months due to a sharp rise, and lack of supply, in timber and cladding prices. As a result, this has contributed to the increased house prices over the same time frame. 

These market trends not only make it difficult for prospective home buyers, but it’s also a difficult situation for contractors looking to build. This is something we’re accounting for with our deals at Southern Cross Partners.  

While past performance doesn’t predict future results, we’re proud that investors have never lost money through SCP to date due to our conservative lending criteria. Regardless of what the market does we will remain conservative lenders, ensuring buffers are built into our loans that account for market shift. We also make construction loan payments in parts, to ensure builds are on track.  

With the current influx in loans and heightened costs associated with construction projects, we’re only lending on the best opportunities and ensuring we aren’t over-exposed to construction lending in our portfolio. During the last 25 years we’ve learned that being prudent and focused on having a balanced portfolio helps us thrive through the ups and downs of Aotearoa’s property market and keep providing our investors with ideal loans. 

If you ever want to understand more about how we make lending decisions or how the market may be impacting any loans, feel free to call or email our team.