Builders believe the cost of construction is much higher than figures released on Wednesday by a property data company.
On Wednesday, CoreLogic released a report which showed the cost of building over the past year had risen 6.1 per cent. This was a big jump from a 3 per cent rise in 2020 and a 3.9 per cent rise in 2019.
The Master Builders Association challenged the numbers.
"If anything I think that's conservative," said David Kelly of the association.
"I suspect it's closer to 10 per cent."
Continuing delays in getting building supplies into the country were a big part of the hike in costs.
"In terms of the international supply chain, nothing's improved and, in fact, the outlook for the next few months doesn't look very promising," Kelly said.
Kelly said there were delays getting a basic building product like gib to job sites. He said the waiting time had increased since Christmas.
"Look, anywhere from between three and six months."
Master Builders said another key factor affecting rising costs was trying to find labour.
"There is a shortage, and that's simply a fact that we've got so much work on, and while there's fantastic work around apprentice training, that takes time. But we simply can't bring in people from overseas that we have previously," Kelly said.
CoreLogic said that prospective homeowners also faced a squeeze from higher interest rates.
"It's not just that it's costing you more, from the build perspective, but it's going to cost you more to finance it, so there are a lot of pressures coming on," said CoreLogic chief economist Kelvin Davidson.
"It will mean some people are turned off building of course."
Finance Minister Grant Robertson told 1News the Government was working with the building industry to try and speed up supply.
"That includes working down to the product by product level to see what we can get into New Zealand more easily, clearly this is a global issue."
Robertson acknowledged the heat was on consumers.
"I've consistently said over the last couple of years that as people are borrowing money they need to be aware that the repayment terms that they have will change, and clearly for some people that will cause them a degree of stress."
The financial pressure may make some consumers consider a fixed price contract, but Master Builders told 1News that it was advising members not to offer them, because of the risk to firms from rising costs.
The association also warned that if consumers did sign a fixed price deal, there was a risk that costs might force the builder out of business, leaving them in a desperate position.
Their advice was for consumers to talk through a project with a builder or designer as soon as possible.
"And work out what you can afford, because it may mean for instance downsizing a little, " Kelly said.
"I think some people will make the decision to delay," he added.
Builders said an easing of Covid may help, which would free supply lines and allow more labour into the country.
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