Residential construction costs have increased at a record annual rate, according to the CoreLogic Cordell Construction Cost Index.
Home building costs in the September quarter were 11.0% higher than the year before. That was a sharp increase on the 10.0% increase in the June quarter and also higher than the previous record of 10.2% from 2001.
CoreLogic construction cost estimation manager John Bennett said costs were continuing to rise, especially across timber and metal materials, which was affecting framing and reinforcing.
“In particular, we are recording significant volatility in pre-fabricated framing and the range of products affected by higher building material costs is only growing, with many suppliers having little choice but to pass on price increases,” he said.
“This quarter [September] has also shown a larger increase in the cost of wall linings, including plasterboard and fibre cement, which previously had been relatively stable. It will cost you more to get into your house too, with the price of doors showing a sharp rise in the last quarter.”
Conditions unlikely to improve anytime soon
CoreLogic research director Tim Lawless said the ongoing increase in construction costs would have a big impact nationally.
“This new high in the cost of construction flows through to margins, unexpected costs for consumers and potentially lengthy delays to homeowners who are waiting on the sidelines, often in rental or short-term accommodation, for the completion or possibly the start of their project,” he said.
“We also forget the impact to existing home owners and the insurance industry, as they struggle to reassess existing policies in a timely manner to make sure they are adequately covered in the event they need to make a claim.”
Mr Lawless said labour shortages and supply issues meant it was likely conditions in the construction industry would remain challenging in the short- to medium-term.
“The backlog of construction approved during COVID is still being worked through and on top of that is the rebuild and repair work following this year’s major weather events, with more forecast this month. The demand and pressure for construction materials and trades is expected to continue,” 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.”
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