Construction Costs in Australia Show a Decrease in Growth


After two years of steadily rising construction costs for new homes and renovations, there is finally some positive news. CoreLogic’s Cordell Construction Cost Index (CCCI) indicates a slowdown in the growth rate of construction costs. In Q1 2023, the index reported a 0.9% growth rate which is significantly lower than the 1.9% recorded in Q4 2022. Additionally, the annual growth rate has eased from its peak of 11.9% in the 12 months to December 2022. While the industry is encouraged by the quarterly figure returning to long-term averages, it’s important to note that annual growth remains 2.8 times higher than the pre-COVID five-year average.

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The CCCI highlights that although there has been a gradual easing in the growth of construction costs, the market remains unstable due to volatile pricing caused by restricted domestic supply chains, material, and labour shortages. CoreLogic Research Director Tim Lawless says that while construction costs continue to increase, there has been a notable shift in the established housing market, with a month-on-month increase in CoreLogic’s national Home Value Index for March. Lawless also points out that the construction industry will continue to face challenging conditions due to a sustained increase in the number of houses under construction.


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