Australian construction costs continue to go up – and up

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.”