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Building material costs, high hourly rates for skilled tradies and increasing red tape are pushing building costs through the roof in the South, builders say.

Local builders report that critical materials such as steel, aluminium and paint are increasing by about 15% every year, while labour and compliance costs have also jumped.

‘‘It’s the biggest investment you are likely to make so you need to be clear up front around what you want, have a clear brief and understand your budgets,’’ AJ Saville Builders owner and registered master builder Allister Saville says.

Even then, it is likely costs will escalate, particularly where renovations are concerned, so Mr Saville suggests adding in a 15% to 20% contingency.

‘‘Quotes are guesswork. We don’t see behind the wall and joining old to new can at times be very challenging.’’

Mr Saville said choice of builder should also depend on whether you are doing a renovation or a new build, as they are quite different skill sets.

‘‘Not everyone can do a quality job, so it is important to look at their prior work.’’

The same applied to architects, designers or draftsmen, he said.

One South Otago-based developer said there were too many variable costs to provide any price guarantees, even on new builds.

He said while franchise groups could offer to come in at about ‘‘basement’’ rates, that was only to get a foot in the door and was ‘‘almost never’’ the final price.

‘‘Home builders could expect significant price variance, based on materials used, but also due to costs outside the control of the builder.’’

Mr Saville said a new build for $1800-$2000/sq m might have been reality about two to three years ago, but franchise builders in Otago now were more likely to be between $2000-$3000/sq m.

He said bespoke, architect builds would be closer to $5500/sq m and pricing of between $10,000-$15,000/sq m was ‘‘not uncommon’’, particularly in areas such as Queenstown Lakes.

A number of smaller, independent builders were now turning to co-operative styled buying groups that were able to leverage buying power for building material discounts.

Combined Building Supplies Co-operative chairman Carl Taylor said the co-operative had grown almost 10-fold since its inception two years ago, having 250 shareholders and 35 supply partners.

Construction Marketing Services (CMS) general manager Ian Watt said they were aware that materials can be more expensive the further south you go, reflecting logistics and transport.

A recent industry survey by CMS, which represents a cross-section of about 150 construction industry suppliers, showed cost and quality of building materials, shortage of skilled labour and the costs of red tape were the ‘‘big three’’ issues facing the industry.

‘‘Coming to grips with costs is a key element of making housing more affordable.

‘‘The industry is dominated by maybe 50 companies in total [which] make the majority of the building stock for trade.’’

He said there were other issues at play, some related to the understanding between the different players in the building process, from the architect or designer to the construction company and client.

Mr Saville said labour costs for tradies, which could come in at about $80 per hour, were another major issue.

‘‘Builders can’t charge as much as plumbers or electricians, yet our name is on the job so we take the majority of the risk.’’

brent.melville@odt.co.nz