Chapter 1: What is the main topic discussed in this episode?
do we actually see OCR increases coming back onto the table sooner than what we thought?
Kia ora and welcome to New Zealand Property Market Podcast brought to you by Cotardi for the 19th of January, 2026. I'm Head of Research, Nick Goodall, and I'm joined today as per usual by Chief of Commerce, Calvin Davidson. Calvin, we've got an update on how the debt-to-income data is being reported to run through later on.
I think it's an important one to cover off after our conversation last week where we talked about the investors being close to their limits. We'll get to that later. First, let's take a look at the construction sector, starting with the Cordell Construction Cost Index, of course, the CCCI, CCCI for Q4, which was out last week.
What did we report for that quarter, Kelvin, and how did the release go?
Yeah, so I mean, more of the same, really. Construction costs still relatively flat. I mean, they're going up a wee bit, but certainly not that post-COVID spike that we had. So it was a 0.9% increase in the fourth quarter of the year. This is across the cost to build a standard dwelling, I guess.
This is across wages, materials, and your professional fees, dwelling consent charges, that sort of thing. So pretty standard sort of inputs. Yeah, 0.9% across the quarter, 2.3% across the year. Now, both of those are still below averages. The long run annual increase is about 4%. So yeah, 2.3%, let's call it sort of half the normal rate.
So yeah, costs still going up a wee bit, but below average, the actual level of costs is a lot flatter than it was certainly after COVID where we had sort of a 10% spike, I think was the worst point in terms of construction cost increases. So the plasterboard shortages, all of those things. So yeah, we're still seeing costs go up a little bit, but not much.
And it fits with that wider downturn we've seen in the sector. know capacities opened up a little bit so it all kind of fits that costs would be flatter but yeah i guess looking ahead there's there's reasons to think it might turn around a little bit i mean we've seen the construction sector in terms of workloads start to start to grow a little bit more um interest rates are down
lending rules incentivize new builds of course around the LVR and DTI limits so I think there's and the anecdotes around construction are a bit more positive too so I guess you know more activity this year builders getting a little bit busier you would anticipate that cost growth could accelerate a little bit as well but you know we're starting from a pretty low base I think maybe expectations around costs are just shift a little bit as well so you'd think it we might see a little bit more growth this year but return to that COVID spike seems pretty unlikely so yeah kind of more of the same really I think
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Chapter 2: What trends are highlighted in the construction sector?
Yeah, yeah, for sure. And I think before we move on and maybe get to more of an economic overview with a few other data sets that were released last week, on the activity levels of construction, we did also get some consenting data last week for November. I did note that, you know, that activity was up 13% year on year.
and the annual title has now grown to $36,000 over the year to the end of November. For many people listening over the last few months, we've sort of been talking about that average or that annual number had been hovering around that $33,500, $34,000, which we thought was a pretty decent bottom of the market if it was going to be that, and it had plateaued there.
Now we've actually seen a bit of growth come through too, so a bit more activity. And like you say, all of the things you've spoken about, the certainty, the low interest rates, the exemptions from all of the lending rules, That's a reason to continue to go towards building a new property. And that certainly seems to be the case with things turning around once again.
And the construction sector, while it has reduced in size, and no doubt felt some pressures over the last few years, hasn't been completely hauled out.
Chapter 3: How has the Cordell Construction Cost Index changed recently?
And so it is hopefully in a good stead right now and able to be able to ramp up as and when as required if demand comes back properly. and strongly through the next year as the economic cycle starts to improve, then you sort of think this construction sector is well placed to make the most of that too. And we know that we've had improved land use changes as well.
So we're encouraging new builds and more intensification in the right areas that are supported by the right infrastructure. So yeah, if you're going to sum up that vibe, it certainly seems pretty positive for the construction industry overall anyway.
Yeah, for sure. Yeah. And I think the point there is that, yes, you know, we've had a deep downturn in dwelling consents and, you know, it's not the only measure of construction activity, but it's sort of slightly forward looking and it's one that people watch. It's easy to measure. So, you know, it's been a pretty deep downturn.
But as you say, that's sort of 33 and a half, 34, now up to 36,000 on an annual basis. That's still really high compared to the past. So, you know, we've, yes, it's been a deep downturn, but we've still got a flow of
properties coming through and you know we're maybe seeing that in for example the weakness of property rents right now you know that the market has seen the physical stock of housing go up and rents are either flat or falling your house prices you know flat or falling so you know i think it just goes to show what you what you can do when yep we've we've seen construction activity fall away but we're still adding supply and shows what what you can do when when you get supplies so um
Yeah, and we get a pickup from here. Great news for sort of economic activity and also that housing affordability.
Yeah, exactly. Yeah, no, I think it's definitely a good situation. That was November, so it hasn't quite finished off the year, of course, but I suspect that we'll see the continuation of that trend in December and then throughout this year. So that's a good one to nail down. Excuse the pun. Let's move on to the broad. an economic overview then. I don't know where you want to start with this.
I suppose there was generally some decent data out last week. The one thing I spoke about last week was really interested to see some of the retail spend data that comes out for December to see how retail spending was through that month, in particular in Boxing Day.
I did see, I think it was the day after we recorded last week, some data from Worldline came out that showed Boxing Day sales themselves had slumped
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Chapter 4: What factors are influencing construction costs today?
And if we did see a concerning inflation number, you wouldn't be surprised to see sort of wholesale interest rates start to tick up a little bit. Who knows? We'll see if that passes through to mortgage rates. Yeah, it's good and bad. I mean, obviously, a recovering economy is great. We want to see more GDP growth, but it does tend to come with some inflation pressure as well.
So always trade-offs in the economy.
Yeah, no, it's going to be intriguing, I think. Yeah, just the devil will be in that detail, right, as to what is contributing to that growth and inflation. Then we can get a feel for maybe how the Reserve Bank might read it. You know, given the new governor, Anna Bremen, you know, she's been pretty proactive with her conversation recently.
um and communication and so you know when this release comes out do we see anything from her giving her take on it um you know or or are they going to go back to what was previously happening which is they kind of wait until either big speeches are coming up or they actually put out their uh you know ocr decision or their statements before they actually say anything eventually see if we said give anything in the interim from hers to her read on it um but like you say
You know, while it may not mean necessarily that we're going to start to see OCR increases sooner rather than later, it certainly will put paid to any more drops, which I know no one was really forecasting. But there was always a lingering thing in the background that, you know, they could still drop the OCR again.
Does it get to 2% if they truly want to stimulate things and feel like it hasn't flowed through through that Christmas period, which, as I said, prior to Christmas and now again, let's wait and see how that Christmas period goes because the Reserve Bank will be very interested to see how all of their rhetoric, their drops in the OCR, their assurances that its rates will stay low, trying to stimulate that spending.
If it doesn't really occur, then do they have to double down and do one more cut? But maybe this data just will make them go, hmm, Well, we'd like to because the economy hasn't recovered to the level that hoped. Then, you know, they just have to be too mindful of that inflation data to push up the OCR instead of, you know, knocking it down or whatever. So, yeah, certainly an intriguing one.
We'll wait for Thursday and no doubt have a decent conversation about that next week. Anything else on your mind from the economy perspective, Kelvin?
Not too much. I mean, I guess the only other thing was part of that selected price indices releases that you get rents. And yeah, rents still pretty soft. I mean, it depends on your perspective, of course. Great for tenants, not so good for landlords. It depends on your perspective. But yeah, their flow measure of rents, which relates to new tenancies, was minus 0.3% in the year to December.
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Chapter 5: How is the construction activity data reflecting market recovery?
Yeah, just monitoring the data. CPI towards the end of the week, that'll be a biggie. I mean, people with mortgages, as most of us, you know, they'll be watching what comes out of that. If it's slightly stronger than expected, you know, there's possibly some concerns there in terms of possible, you know, OCR increases being brought forward a little bit. So, yeah, definitely a biggie to watch.
Stop saying that. You are going to freak people out.
Some time, not saying it'll be immediate, but yeah, it's definitely going to create some chatter anyway.
Yeah, fair play. I just got a trip to Auckland again on Wednesday. For those that might have listened and watched last year, I did a recording with a couple of guys who run this podcast called the Home Run Podcast for Real Estate, doing a bit of an update. I think it was May last year we did it and sort of talked about my expectations of the future.
So we're going to check back in to see how they actually went. and then give an update on expectations for this year. So I'm looking forward to that one. Plus, we'll see a few clients and have a few hellos. So I'm looking forward to being back up in Auckland for a full work day, as opposed to swatting off to the tennis like I did last week.
So looking forward to that and hopefully see some of you while I'm there. But otherwise, that is us for today. Thanks as per usual for your insights, Kelvin, and especially looking into that DTI information. Really good to get that clarity and
and improvement on the data um so i say thanks very much for listening please do get in touch with any questions or feedback as well keen to hear what you'd like for us to do this year um but yeah that's that's pretty much us so let me say thanks once again my name is nick he's calvin you've been listening to the property market podcast
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