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The building sector is welcoming a drop in steel prices with one project manager expecting more reductions in the coming months. 

Atlas Concrete announced on Tuesday it would be dropping the cost of several steel items as suppliers dropped their prices. 

The price drop will come into effect on October 1 and will see the cost of steel mesh, rods, stirrups and links all decrease by five percent. 

In an email to customers, the company said the price drops come after "large inflation across the construction industry" over the last 12 to 18 months. 

"With the availability and supply of steel products become (sic) more readily available, our suppliers have advised us of a decrease effective 1st October," Atlas Concrete said. 

"With the pressures of the last 18 months in mind Atlas Concrete are happy to directly pass this saving on to you, the customer."

Mathew Wade, project manager and director of consultancy company Maxco Limited, said the price drops will come as a welcome relief for those in the industry.  

"Any amount is a massive relief, particularly for the residential sector, where developers just got to the point where they just cannot make development stack up," Wade told Newshub. 

"You know, the costs of compliance and the cost of building and the timeframes that keep getting extended just kill a project."

Wade said he also expects to see more drops on other products as supply chains normalise after COVID-19. 

Wade said prices are also starting to come down because steel manufacturers in New Zealand seemed to take advantage of higher global shipping costs - which skyrocketed during the COVID-19 pandemic - to in turn raise their prices. This keeps them on par with imported steel prices, and because people want their products to be made locally, they go with New Zealand-made, he said. 

"Even with the high shipping costs, I understand imported steel is now cheaper," Wade told Newshub. "And that happened about a month ago and now the New Zealand companies are starting to follow suit and reduce their prices to be more competitive."

"My guess is that everybody's taken the opportunity to earn more and increase their prices and their margins where they can. And yes they've had genuine increase in costs, probably across fuel and other bits and pieces, but I think that there's still a bit of inflation there.

"They've sort of seized the opportunity to hike their prices up a bit because all of their competitors are at a similar level. And now that that's starting to come down, I guess our hope is that a few other materials might follow suit."

There has also been a falling off in demand for construction products and projects, he said.

Construction costs have been an ongoing issue for the sector over the past few months with several key products skyrocketing in cost. This has been coupled with a building boom in New Zealand and steadily increasing house prices. 

But over the past few months house prices have been dropping as the market cools due to ample supply, increasing interest rates and harsher lending restrictions. 

This has seen house prices drop by a whopping $100,000 in Auckland since March, according to the latest Trade Me data.

The data shows average asking prices for properties across the country have dropped by 6 percent, or $61,000, since March.

Auckland has seen the largest plunge, followed by Wellington with an $82,000 fall. Prices in Gisborne, Bay of Plenty and Hawke's Bay are all down by at least $51,000. The only region unscathed was Otago.