Business, Earthmoving News

Construction costs continue to rise: CoreLogic

CoreLogic’s Cordell Construction Cost Index (CCCI) report for Q2 2022 shows that national residential construction costs increased by 10 per cent over the 12 months to June 2022 – the highest annual growth rate on record outside of the introduction of the goods and services tax a decade ago

CoreLogic construction cost estimation manager John Bennett says that Cordell’s figures show the cost of metal, structural steel, reinforcing, fixings and fencing are under pressure, adding to rising prices across timber products.

He says the surge in construction costs remained broad based, with the quarterly index change ranging from 2.2 per cent in South Australia to 2.5 per cent in NSW and Victoria. Queensland and Western Australia both recorded a 2.3 per cent increase in construction costs over the three months to June; slightly lower than the national growth rate.

“Suppliers are frequently mentioning the impact of rising fuel, freight and electricity costs on their bottom line and these are significant additional challenges being faced by the industry,” says Bennett.

“It is important to note these factors only add to other pressures that have impacted the residential construction industry for 18 months now, such as labour availability and overheads. A shortage of labour and materials means a delay in completion times, which leaves builders vulnerable to market changes and holding costs.”

CoreLogic research director Tim Lawless says the double-digit annual increase in construction costs had been expected.

“Construction costs have increased more than 25 per cent over the past five years, which has a knock-on effect to builders’ margins, budget blowouts for customers not on fixed price contracts and homeowners waiting for their projects to finish, or even start in many cases,” he says.

“It’s also impacting the insurance industry, as homeowners struggle to reassess existing policies.”

He says the short to medium-term outlook for the construction industry remained challenging, with ongoing labour shortages and supply issues.

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