Australian construction costs continue to go up – and up
Victoria has been worst hit by rising prices over the past year, with no end in sight
Victoria has been worst hit by rising prices over the past year, with no end in sight
National construction costs are continuing to climb at record rates, CoreLogic reports.
The Cordell Construction Cost Index showed residential construction costs increased by 11 percent over the 12 months to September 2022 across the country, compared with a 10 percent rise recorded over the past 12 month to June this year.
The rising costs, especially for timber and metals, were impacting on structural stages of housing construction, such as framing and reinforcing, CoreLogic construction cost estimation manager, John Bennett said.
“This quarter has also shown a larger increase in the cost of wall linings, including plasterboard and fibre cement, which previously had been relatively stable,” he said. “It will cost you more to get into your house too, with the price of doors showing a sharp rise in the last quarter.”
Queensland was the worst affected state this quarter, recording a 5.8 percent increase, followed by Victoria at 5.6 percent and NSW at 4 percent. Western Australia saw the lowest quarterly increase at 3.3 percent.
Victoria has experienced the highest rise in construction costs over the past 12 months, recording a 12.3 percent increase to September this year.
CoreLogic research director Tim Lawless said there was no easy answer to the pressures of rising material costs and the COVID-related backlog of residential construction that is still apparent. Recent weather events, and the subsequent damage to homes that now required repairs, would only add to the squeeze on resources in the building industry, he said.
“There’s no quick solution for providing additional materials and fuel costs remain elevated. All of these factors have an impact and are likely to push building costs higher for some time yet,” Mr Lawless said.
“Persistently high construction costs are clearly adding to inflationary pressures as well, with the price of new dwellings one of the most significant contributors to the June quarter inflation reading.”
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The construction sector is roaring back to life in some Australian states while others languish in the doldrums
The home building market is on the rebound as building approvals rise, new data reveals.
Information from the Australian Bureau of Statistics shows that the total number of dwellings approved in August was up 7 percent seasonally adjusted, with apartments leading the way.
Private sector house approvals gained 5.8 percent in August while private sector residences excluding houses were up 9.4 percent. This follows on from a decrease of 14.6 percent in July and indicates a solid recovery in the Australian construction sector as the end of the year approaches.
Approvals for total dwellings were strongest in the two largest states, with Victoria recording a rise of 22.2 percent and NSW 12.5 percent. Western Australia also saw a significant rise of 12.3 percent.
In Queensland, the results were less positive for the sector, with total dwelling approvals falling by -26.9 percent. Tasmania also experienced a drop in approvals in August, down -10.1 percent and South Australia -6.9 percent.
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
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