The retirement village construction conundrum: Lessons NZ could learn from Australia

It’s 50% more expensive to build a house in New Zealand compared to Australia, which is “frankly outrageous,” said Chris Penk, Minister for Building and Construction, in a press release. It’s not only homes, it’s also commercial buildings and developments.

Construction delays add costs for retirement villages

Our recent study of the retirement village sector in New Zealand, The path to profitability, exposes the risks and long timelines experienced by operators in achieving sustainable business outcomes. Our analysis reveals the payback period for an average retirement village can be more than 20 years, and one of the most influential variables impacting that timeframe is the cost of construction. A project’s construction timeline heavily influences how soon – or how late – operators can start selling ORAs, generating revenue, and achieving positive cashflows. Our research found that if the margin on an actual ORA sale price is more than 10%, all things being equal, a positive payback can be reached within 25 years. If the ORA margin drops below 10%, a positive payback within the first 25 years is unlikely to be achieved. 

According to JLL’s Retirement Villages Market Review, demand is projected to outpace development by more than 8,300 units by 2033, with the gap widening to 23,242 units by 2048. To meet this need, the industry must deliver an additional 932 units annually for the next 25 years.

Addressing this challenge requires a focus on productivity. Investing in efficiency can accelerate delivery, reduce costs, and improve margins. Beyond meeting housing needs, this approach would provide a substantial boost to the construction sector and create long-term economic benefits. 

How Australia keeps construction timelines and budgets lower

How does Australia build for less while paying tradies more? In some respects, we can’t compete. Their population is 28 million while ours is just over five million. That leads to more competition and significant economies of scale. The country is also physically closer to supply markets for many materials, which means shipping costs are lower. Seismic requirements are lower in Australia, because it is significantly less earthquake prone. By comparison, similar projects in New Zealand require more steel and stronger plasterboard.

The weather is another critical factor: huge swathes of Australia are arid, which means builders can work outdoors with few rain interruptions. Clear skies cut construction costs: fewer delays, faster projects, lower holding times. 

We can’t fix our wet weather and we can’t change our location. But we can take some lessons from Australia by reducing red tape and embracing innovation. 

Red tape reduction will have a significant impact

One glaring area where New Zealand adds to its costs is red tape. Our consenting process is slow, has previously called for very specific materials, and building consents have been needed for even relatively simple builds like sheds. 

There have already been some changes to reduce red tape, with more consistency between authorities, and more clarity around legal responsibility if something goes wrong. Self-certification by trusted builders is back on the cards, and expected to be introduced by the end of 2026, and 80% of building inspections will need to be completed in three working days. Earthquake-strengthening regulations are also likely to relax, with a “risk-based” approach proposed which will exempt Auckland, Northland and the Chathams from the rules entirely. 

Another problem for the construction sector has been material costs: New Zealand pays 38% more for plasterboard than Australia. Until recently, 97% of the plasterboard used here came from a single supplier. A welcome change in July 2025 saw thousands of additional building products given the green light for use in construction sites. Products that are certified by suitable overseas authorities are now automatically approved for use in New Zealand. That’s a useful start and will hopefully lead to more competition among products and suppliers. 

Everyone in the industry is happy with the direction of change, but more is needed. For example, the South Australian Government recently announced it was reclassifying retirement and aged care facilities as ‘essential infrastructure’. The move is forecast to cut approval times significantly, improving the feasibility for these types of projects. One industry expert called it a “no-brainer… given retirement villages contribute to 14,000 avoided hospitalisations across the country every year.” A move like that would make an enormous difference to New Zealand’s retirement village operators and our aging population. 

Innovation can help counteract geographical challenges

We know New Zealand can build quickly: after the in 2023 floods, Auckland Transport reinstated a bridge in Riverhead in just six days. 

However, low productivity has long been an issue for New Zealand’s construction sector. We are not as innovative as our Australian counterparts, and that’s a problem because technology is one of the only ways to overcome the challenges of being a tiny and remote island nation. For example, we have been woefully slow to embrace prefabrication which allows builders to work indoors and escape bad weather. It can reduce construction time by around 60%, improve sustainability and shave costs. In 2023, Kāinga Ora constructed a six-storey apartment block in about six months, thanks to modular construction methods. 

Technology use is also lagging, with 5% of large construction companies using none of the most common on-site technologies, according to the 2025 Construction Industry Survey by Teletrac Navman and Civil Contractors NZ. No apps, no AI, no wearables, no fleet tracking, no health and safety monitoring software. Our Australian neighbours are outpacing us here, and we need to step up. 

Let’s close the gaps where we can

It’s extremely unlikely we will ever achieve construction cost parity with Australia. The size difference, the location and the weather almost guarantee at least a 10% lower cost in Australia. But a 50% difference is honestly outrageous. It’s making New Zealand unnecessarily slow, uncompetitive and expensive compared to other countries. With less red tape and more innovation, we can close the gap and help make New Zealand a more productive and successful nation – while also providing better care for our older population.