- Builders report a surge in enquiries for new builds and renovations, following a two-year slump.

- Interest rate drops are driving the increase, with homeowners feeling more confident about spending.

- Construction activity is expected to improve further in 2025, with costs easing.

The new year has started with a bang for some builders, who say their phones have been inundated with requests from clients for new builds or extensive renovations.

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The sharp rise in enquiries will be a welcome relief for the sector, which has seen a slump in building work – especially new builds – in the last two years.

Hawke’s Bay builder Dylan Cossey, who owns DC Construction and shot to fame following an appearance on The Block NZ, said his phone had been “ringing hot” over the past few weeks.

“From March to September last year it was quiet, man. There were no tradie wagons on the roads – it was almost like the school holidays.

“But then things started to happen – phones started ringing again,” he told OneRoof.

Tradies have been hitting Mitre 10 and Bunnings in force this month, with construction work expected to pick up in 2025 after a two-year slump. Photo / Dean Purcell

Builder Dylan Cossey, right, with his friend and Block teammate Dylan Guitink. Photo / George Block

Other tradies appear to be busier too. “People are re-energised. I’ve just been into Mitre 10 to grab some stuff and it is full – like rammo with tradies,” he said.

Cossey said he had just completed an appraisal for a large renovation of a 1950s, which was to include a 250sqm extension.

He’s also had meetings with a client who is looking at doing multiple builds this year. “It’s really positive,” he said.

MTP Renovations & Maintenance managing director Mark Trafford has also noticed an uptick in enquiries, which he believes is directly aligned with the recent drops in interest rates.

“The renovation market has certainly picked up. I think that’s driven predominantly by interest rates and I think if those rates do come down again then we will push on and be busier and busier,” he said.

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“That 0.5% obviously spurred people. I don’t think their house price has increased, but I think that it’s given them confidence.”

Trafford said all the Maintain to Profit franchises in Waikato, Auckland and Bay of Plenty were starting the year with busy order books.

A lot of the requests were for new kitchens, bathrooms and extensions, with the firm carrying out 100 bathrooms and 100 kitchens a year.

However, he said people were still careful with their money and wanted to make sure they got good value. The average kitchen or bathroom renovation averaged around $30,000 and $40,000, although they did carry out one last year that cost $120,000.

“There’s plenty more interest than what there was. I think interest rates are probably the main driver for that, but I think people are still cautious. Probably about their jobs more than anything.”

Tradies have been hitting Mitre 10 and Bunnings in force this month, with construction work expected to pick up in 2025 after a two-year slump. Photo / Dean Purcell

Construction costs are expected to remain flat this year. Photo / Getty Images

GV Financial Services director and mortgage adviser Gareth Veale said the drop in interest rates had definitely made the cost of borrowing cheaper for homeowners.

He had noticed an increase in clients wanting to borrow to upgrade their homes – specifically putting in new bathrooms and kitchens – after the Official Cash Rate dropped below 5% in October last year.

“People feel more comfortable and able to do stuff again,” he said.

“You’ve got people coming off interest rates that were in the late 7%s and are now in the 5%s. That purchasing power enables them to be able to do a lot of things.”

Clients were also considering building again, he said, because costs seemed to have come back and there was a lot more competition between builders again.

Tradies have been hitting Mitre 10 and Bunnings in force this month, with construction work expected to pick up in 2025 after a two-year slump. Photo / Dean Purcell

GV Financial Services director Gareth Veale: "You’ve got people coming off interest rates that were in the late 7%s and are now in the 5%s." Photo / Supplied

The latest CoreLogic data also pointed to a lift in construction activity this year.

CoreLogic chief economist Kelvin Davidson said construction conditions look set to improve in 2025 as mortgage rates drop, but the overall cost of building could still remain relatively controlled.

The Cordell Construction Cost Index showed annual construction cost growth over the past 12 months had slowed to just 1.1%, down from 2023’s rise of 2.4% and also well below the spike of 10.4% in 2022.

The latest new dwellings data from Statistics NZ also signaled that it may have hit the bottom sometime last year.

Another reason why people might be considering new builds was because loan-to-value ratio (LVR) rules and debt-to-income (DTI) ratio restrictions incentivized new-build dwellings, he said.

“DTIs aren’t having much impact right now, but with mortgage rates falling they’re set to become a greater consideration in 2025 and could result in a relative shift in property demand away from existing dwellings and towards the new-build segment.”

OneRoof reached out to Mitre 10 and Bunnings for comment. Both declined to respond.

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