Build now 'and save $10,000'

Now is the best time to build a house to beat potential cost rises that could add thousands to the price tag, according to PlaceMakers chief executive John Beveridge.

Building prices would rise over the coming months, including increased timber costs which were likely to add $1000 to a current build and another $1000 in the winter, Beveridge said.

Taking all potential cost increases into account, including labour and a rise in GST, the cost of building a house could rise by $5000 to $10,000, he said.

"I would say that that's being fairly conservative," he said. "We're really saying, 'hey if you're in the market there's more factors in favour of building now than holding on for another six months'."

There had been a stimulus package in China, while Russia had been less active in exporting logs, Beveridge said.

"The demand from China and Asia in general has pushed the prices of logs up substantially."

Agricultural market analyst Agrifax said the volume of log exports for the year to February was more than 9 million cubic metres - a 59 per cent increase on the average for the previous four years.

China took 52 per cent of log exports in February.

Beveridge said steel prices had also risen significantly, while the cost of builders and labour was rock bottom, with many people having left the industry because of failure or lack of work.

"Any up-tick [in activity] will put pressure on labour rates and build costs as well," Beveridge said.

Activity had picked up from a very low level when the industry hit about 12,000 annual building consents, compared to about 16,000 currently.

Meanwhile, some people were starting to think an increase in GST was becoming inevitable, he said.

"When you start to put product price increases, potentially builders increasing their very low margins that they're operating at, then the impact of GST on top of that and you run 2.5 per cent across all those products then the increase becomes far more than $2000 for timber."

In many areas people issued with a consent, which could be valid for a year, had not started building, whether it was because they were waiting to sell a house or looking at the potential implications from tax changes, Beveridge said.

"If all of a sudden people that are holding consents or thinking of building all decide to start moving at the same time then there could be a flurry of activity over the winter."