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Cordell Building Indices

Cordell New Housing Index Price (CHIPS) New Zealand | May 2018


Contents Introduction to the Cordell Building Indices

3

Key Components

3

Cordell Housing Index Price

4

CHIP & Consumer Price Index (CPI) Figures

5

Current Quarter Movement Graphs

6

CHIP & Consumer Price Index (CPI) Compared

7

CoreLogic Housing Index Prices New Zealand May 2018 | 2 Š Copyright 2018. CoreLogic and its licensors are the sole and exclusive owners of all rights, title and interest (including intellectual property rights) the CoreLogic Data contained in this publication. All rights reserved.


Introduction to Cordell Building Indices

Key Components

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 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.

The CBI indicates the rate of change in prices within particular segments of the New Zealand construction industry.

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.

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.

CoreLogic Housing Index Prices New Zealand May 2018 | 3 Š Copyright 2018. CoreLogic and its licensors are the sole and exclusive owners of all rights, title and interest (including intellectual property rights) the CoreLogic Data contained in this publication. All rights reserved.


Cordell Housing Price Index The Cordell Housing Index Price (CHIP) measures the rate of change of construction costs within the residential market and covers freestanding and semi-detached single and two storey dwelling homes. The key categories within the CHIP index include:  Preliminaries

 Excavation and Concrete Work

 Brickwork

 Carpentry and Joinery

 Roofing Insulation and Roof Plumbing

 Windows and Glazing

 Doors and Hardware

 Plastering

 Painting and Tiling

 Plumbing and Drainage

 Electrical Services

 Sundry Appliances

CHIP Trade Breakup 25%

20%

15%

10%

Doors & Hardware

Windows & Glazing

Electrical Services & Sundry Appliances

Plastering

Painting & Tiling

Brickwork

Plumbing & Drainage

Roofing Insulation and Roof Plumbing

Preliminaries

Excavation & Concrete Work

0%

Carpentry & Joinery

5%

CoreLogic Housing Index Prices New Zealand May 2018 | 4 Š Copyright 2018. CoreLogic and its licensors are the sole and exclusive owners of all rights, title and interest (including intellectual property rights) the CoreLogic Data contained in this publication. All rights reserved.


CHIP & Consumer Price Index (CPI) Figures Year

2012 2013

2014

2015

2016

2017

2018

Months National NZ CHIP National NZ CPI

DEC MAR

% Chg.

Index

% Chg.

Index

0.00

100.0

0.00

100.00

1.10

101.1

0.43

100.43

Change in index points

Avg. of 4 preceding quarter

Annual change in %

Avg. of 4 preceding quarter

Annual change in %

-

-

-

-

-

-

-

-

-

-

1.10

-

-

-

-

JUN

1.38

102.5

0.17

100.60

1.40

-

-

-

-

SEP

0.30

102.8

0.94

101.54

0.31

-

-

-

-

DEC

0.85

103.7

0.10

101.64

0.87

0.70

3.68%

0.38

1.64%

MAR

0.43

104.1

0.25

101.90

0.45

0.91

2.99%

0.41

1.47%

JUN

0.47

104.6

0.30

102.21

0.49

0.74

2.06%

0.37

1.60%

SEP

1.20

105.9

0.30

102.52

1.26

0.51

2.98%

0.40

0.96%

DEC

0.60

106.5

-0.20

102.31

0.64

0.74

2.73%

0.24

0.66%

MAR

0.80

107.4

-0.30

102.00

0.85

0.68

3.10%

0.16

0.10%

JUN

0.60

108.0

0.40

102.41

0.64

0.77

3.24%

0.03

0.20%

SEP

1.00

109.1

0.30

102.72

1.08

0.80

3.03%

0.05

0.20%

DEC

0.50

109.6

-0.50

102.21

0.55

0.75

2.93%

0.05

-0.10%

MAR

0.80

110.4

0.20

102.41

0.77

0.73

2.83%

-0.03

0.40%

JUN

0.30

110.7

0.40

102.82

0.33

0.73

2.52%

0.10

0.40%

SEP

0.70

111.5

0.30

103.13

0.78

0.65

2.22%

0.10

0.40%

DEC

0.90

112.5

0.4

103.54

1.00

0.58

2.62%

0.10

1.31%

MAR

1.70

114.4

1.0

104.58

1.91

0.68

3.64%

0.33

2.12%

JUN

1.90

116.6

0.00

104.58

2.17

0.90

5.30%

0.53

1.71%

SEP

1.80

118.7

0.50

105.10

2.10

1.30

6.45%

0.43

1.91%

1.54

1.58

6.87%

0.48

-

DEC

1.30

120.2

0.1

105.5

MAR

1.10

121.5

0.5

106.0

6.00%

CoreLogic Housing Index Prices New Zealand May 2018 | 5 © Copyright 2018. CoreLogic and its licensors are the sole and exclusive owners of all rights, title and interest (including intellectual property rights) the CoreLogic Data contained in this publication. All rights reserved.


National Q1

121.5

1.1%

6.0%

March National CHIP Index

Quarterly Growth

Annual Growth

In nominal terms, the CHIP index rose 1.1% in the first quarter of 2018. The quarterly nominal growth in the index has been in decline since the September 2017 quarter, when the index saw its second highest quarterly growth rate, of 1.8%, since the start of the back series in December 2012. While quarterly growth in the index is slowing, the nominal growth rate is above the 5 year average of 0.9%. The index demonstrated a period of rapid growth over 2017, culminating in a 6.8% nominal increase in the cost of house construction over the year. Real growth in the index over 2017 was a staggering 5.3%, against a fairly subdued inflationary environment experienced in the New Zealand and global economy. In the March quarter, the nominal annual growth rate eased to 6%, and real growth slowed to 4.9%. Statistics New Zealand building activity data suggests that demand for dwellings in New Zealand remains strong, driven by continued demand from both multiple property owners (comprising 38% of sales at May 2018) and first home buyers (enjoying their highest share of transactions in over a decade at 23% of transactions). Trend data of new dwellings consented across New Zealand suggested a 3.1% increase over 2017. Demand continued to surge in the March quarter, with trend

data indicating a further 7,948 dwellings consented, representing a 2.1% increase on the previous quarter. While residential building has been the main growth driver in New Zealand’s construction industry over 2017, the non-residential building sector has also shown increased demand over the year. Alongside a 10% increase in the value of building work put in place over 2017 on the previous year, the value of work done in the non-residential sector increased 3%. In addition, concrete production rose 2.6% over the year to meet increased demand in building activity. It is possible that such a strong surge in the New Zealand CHIP index was partially driven by the increased dwelling demand and construction over the year, with intensifying capacity constraints in the construction industry putting pressure on building inputs such as labour and material. Above-average appreciations in the cost of house builds may continue, given that investment demand remains high, and the number of dwellings consented continued to surge in the March quarter. In addition to investment demand, government initiatives such as earthquake re-building programs and increased infrastructure investment are also bolstering activity in the construction sector.

CoreLogic Housing Index Prices New Zealand May 2018 | 6 Š Copyright 2018. CoreLogic and its licensors are the sole and exclusive owners of all rights, title and interest (including intellectual property rights) the CoreLogic Data contained in this publication. All rights reserved.


CHIP & Consumer Price Index (CPI) Compared CHIP/CPI NZ CHIP NZ

CPI NZ

140.0 120.0

Index

100.0 80.0 60.0 40.0 20.0 0.0

% Cost Change NZ CHIP NZ

CPI NZ

4.0% 3.5% 3.0% 2.5%

Index

2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0%

CoreLogic Housing Index Prices New Zealand May 2018 | 7 Š Copyright 2018. CoreLogic and its licensors are the sole and exclusive owners of all rights, title and interest (including intellectual property rights) the CoreLogic Data contained in this publication. All rights reserved.


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Cordell Building Indices  

A series of construction industry index figures used to monitor the movement in costs associated with building work within particular segmen...

Cordell Building Indices  

A series of construction industry index figures used to monitor the movement in costs associated with building work within particular segmen...