If you’ve ever built or renovated a property and walked away with a nagging feeling that you paid more than you should have, you’re probably right. After 35 years in the industry, I’ve come to call it the Construction Wealth Tax and unlike the taxes your accountant manages, this one is almost entirely avoidable.
What Is the Construction Wealth Tax?
Let’s start with councils. When local authorities charge rates, they don’t base them on the services your household actually uses, or how many people use them. They base them on the perceived value of your home. The more expensive your property, the more you pay, regardless of whether you have a footpath, street lighting, or a road worth driving on. That’s a wealth tax in its most literal form.
The same principle plays out in the building industry, just less visibly. Suppliers, contractors, and tradespeople routinely price their work based on who they think is paying, not what the job actually costs. If they perceive wealth, through your suburb, your name, the scale of the project, expect a premium. The job is identical. The invoice isn’t.
A Tale of Four Pool Quotes
To make this tangible, let me share a story. A good friend was preparing to sell their home. The property didn’t have a pool, but they wanted to give prospective buyers the option: real numbers to factor in for potential buyers. So, they reached out to four swimming pool companies and requested fixed price quotes for a straightforward build. Large level site with ample room to redistribute excavated soil, good machinery access, no underground services, with a detailed spec covering pool size, depth, finish, fencing, decking, and pump requirements.
Here’s what came back:
- Only three of the four companies bothered to do a site visit before quoting.
- Two submitted quotes with no itemised breakdown and had to be asked again for one.
- Three of the four listed line items as “from X dollars”, meaning minimums rather than the requested fixed price.
- Three of the four omitted key elements from the spec entirely, including safety fencing and decking.
- The quotes (excluding GST) ranged from NZD $220k to over $300k for a seemingly identical scope of work.
The price variance is staggering on its own. But let’s focus on one line item to illustrate the wealth tax in action: the earthworks. Digging the hole.
The cheapest quote for that single item was $30,000 plus GST. The most expensive was listed as “from $40,000.”
What does that work actually involve? An experienced operator with a 10-tonne excavator, running at approximately $150 per hour could realistically complete the pool dig in a day and respread the excavated soil and tidy up in another very comfortably. Call it $2,400 in machine time, $300 in digger transport, and a generous buffer for variables. Even if you doubled that for good measure, using a more expensive digger company and higher travel costs, you’re looking at a $5,000 job max, not a $30,000+ one.
The gap between those two numbers? That’s the wealth tax. That’s the cream on top of the cream. And in New Zealand’s luxury property market, this isn’t an anomaly. It’s standard practice for most.
How We’d Approach It
We’d rarely hand an entire build (even a pool) to a single company. Instead, we split the project into its component parts, engaging specialists directly for each discipline, whether that’s groundworks, electrical, plumbing, or the pool structure itself. Where it makes sense, we go straight to the manufacturer. Where the local supply chain is inflated or limited, we look further afield, including internationally, without hesitation.
We ask for ex-works pricing before locations are disclosed, position procurement commercially, and understand what each component should actually cost before a single quote lands on the table. It’s also worth knowing that many trades won’t push for better supplier pricing themselves, because they’re receiving rebates from those same suppliers. That knowledge is the difference between a competitive price and the wealth tax.
The same principle applies whether we’re organising a swimming pool or delivering a full luxury lifestyle estate.
Where the Money Is Actually Made or Lost
If there’s one principle I return to consistently, it’s this: the money is made or lost long before any activity happens on site.
The conventional approach in much of the world is to design a building and then work out how to build it. This is one of the most expensive sequences you can follow. By the time procurement begins, you’re locked into decisions that drive cost in ways that are difficult to reverse.
The better approach is to design for build. Engage a skilled designer, not necessarily an architect, who understands multiple construction methodologies and related building system efficiencies, material costs, and resource requirements. Involve your builder and project manager in the design phase. The decisions made at that stage ripple through the entire project budget.
A genuinely experienced project manager operating across all three phases isn’t a cost. They’re one of the highest-returning investments a property owner can make. On a significant build, this approach saves millions. Not through cutting corners. Through efficiency and informed decision-making at the right moment.
What This Means for Privé Build Clients
Throughout my career, the most common response I’ve heard from trades when clients question pricing is: “They can afford it.”
That may be true. But the ability to pay a premium is not the same as a willingness to be overcharged, and it certainly doesn’t make the practice defensible.
When we oversee a build under a client mandate, avoiding the Construction Wealth Tax is simply part of how we work. We understand what things actually cost. We know how to structure procurement, which suppliers to approach directly, where local distribution chains inflate margins unnecessarily, and when sourcing from farther afield or internationally makes sense.
We’re also independent. We don’t benefit from inflated quotes, preferred supplier relationships, or volume arrangements with contractors. Our only mandate is yours.
One final point worth making: the best builders, the most experienced and detail-oriented, are rarely the most expensive. But they are always worth finding. A skilled crew gets it right first time. The cost of fixing poor workmanship, in time, money, and stress, almost always exceeds whatever was saved on the day.
If you’re planning a significant build or renovation and would like to understand what that kind of oversight looks like in practice, we’d welcome a conversation.
Related
Two Houses, Two Philosophies: A Tale of Building Performance and Long-Term Value
