It could become more expensive to build a house this year.
Cotality, formerly known as Corelogic, has released its latest Cordell Construction Cost Index, which shows residential building costs increased by 0.9 percent in the three months to December.
The index is made up of 50 percent materials, 40 percent wage costs and 10 percent other expenses such as professional fees and consenting.
The annual pace of increase rose to 2.3 percent, but is still below its long-term average of 4.1 percent since 2012.
Cotality chief property economist Kelvin Davidson said the pace of growth was constrained.
Listen to No Stupid Questions with Susan Edmunds"We are certainly not seeing the extreme inflation experienced in the post-Covid phase, when the [index] annual growth rate peaked at more than 10 percent in late 2022.
"During that period, there were supply chain issues for key materials such as plasterboard and rising wages also drove up costs significantly.
"However, although they're not rising to any huge degree at present, costs haven't seen significant falls either. Following the previous growth phase, the overall level of cost to build a new dwelling remains elevated even though the growth rate has cooled," he said.
He said confidence was returning to the construction sector.
The number of dwelling consents has started to rise again, and reached 35,500 on a 12-month basis in October.
Davidson said that was a turnaround after a period of stagnation.
"After peaking at more than 51,000 in the 12 months to May 2022, the number of new dwellings consented dropped to a low point between 33,500 and 34,000. We are now seeing a recovery that aligns with anecdotal evidence that builders are becoming busier again."
Activity would probably pick up with interest rates down, and rules such as loan-to-value ratios and debt-to-income rules making new builds more appealing.
"I don't think we'll necessarily see a big rise [in costs] because wages, the labour market is still relatively softer than it was a couple of years ago.
"You wouldn't think there'd be large wage increases for the builders, but there might be a wee bit more pressure coming through there. And then materials as well, a wee bit more pressure, but again, not that returning post-Covid."
He said activity could generally trend higher this year and cost pressures could return to normal.