In a marked departure from the past two years of relentless surges, the once-frenzied escalation in expenses for constructing or renovating new homes has notably subsided.
According to CoreLogic’s Cordell Construction Cost Index (CCCI), the growth rate for the June quarter stood at a modest 0.7 per cent.
This is the most sluggish pace since September 2020 and falls below the average growth rate of 1.2 per cent over the past decade.
On an annual basis, the national CCCI increased by 8.4 per cent. CoreLogic Construction Cost Estimation Manager John Bennett said while the national annual growth rate remained high, it was an improvement on last year’s 11.9 per cent, which was the largest annual index rise on record, excluding the impact from the introduction of the GST in 2000.
“While the annual growth figure remains high it’s the lowest level it’s been since the 12 months to December 2021,” Mr Bennett said.
“The latest index figures will bring some comfort and reassurance to the beleaguered building and construction industry as we’ve seen two consecutive quarters of growth more in line with long-term averages.”
While acknowledging the encouraging trajectory, Mr Bennett cautioned that fluctuations persist among various product types. Nevertheless, he emphasised the substantial surges witnessed over the past year have now diminished.
“The CoreLogic costings team is recording some volatility and a large amount of variation across material types, but overall there’s a softening and stabilisation within products such as metal and timber prices,” he said.
“There’s been a significant drop off in dwelling approvals in the year to April, which will flow through to prices. As the level of residential construction work reduces pressure on material costs and labour supply is likely to reduce further.”
Queensland had the highest quarterly and annual growth changes of 0.7 per cent and 9.9 per cent respectively, while Western Australia recorded the lowest increase at 0.5 per cent and an annual figure of 6.9 per cent.
CoreLogic Head of Research Eliza Owen said the slowdown in residential construction costs can also be seen in quarterly CPI outcomes, with annual growth in the cost of new dwelling purchases falling from 20.7 per cent over the year ending September 2022 to 12.7 per cent over the year to March 2023.