Australia’s residential construction costs rose 0.5% over the June quarter, according to Cotality’s latest Cordell Construction Cost Index.
While that’s up slightly from the March quarter’s 0.4% rise (the smallest increase in 14 years), it remains well below the decade average of 1.0% pre-COVID.
Western Australia recorded the largest quarterly jump in costs (0.7%), followed by Victoria (0.6%). NSW and SA both rose 0.5%, while Queensland lagged at 0.4%.
Cotality research director Tim Lawless warned that persistently high building costs were “a key blocker for getting more desperately needed housing supply into the market”, with builder margins being squeezed and feasibility harder to achieve.
Moreover, the increase could impact the Reserve Bank of Australia’s next decision in August, with construction costs up 2.9% over the year to June, compared to 2.6% the year before.
“The reacceleration is likely to weigh on inflation outcomes with the cost of new dwellings comprising the largest weight in the CPI calculation,” he said.
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