Residential construction costs grew just 0.4 per cent nationally over the March quarter, the lowest quarterly increase since March 2010, according to CoreLogic’s latest Cordell Construction Cost Index (CCCI).
The slowdown follows two consecutive quarters of 1.0 per cent increases, bringing the annual rise in construction costs to 2.9 per cent over the 12 months to March 2025 – lower than the 3.4 per cent annual growth seen in December 2024.
The annual change in home building costs has been tracking at or below the pre-COVID decade average of 4.0 per cent since the September quarter of 2023.
“The growth in residential construction costs has clearly slowed significantly,” said Tim Lawless, research director for CoreLogic, which will soon rebrand to Cotality.
“While growth in construction costs eased over the quarter, the cost to build a dwelling is still rising and from an already high base.”
“The 31.3 per cent jump in construction costs since the onset of COVID-19 five years ago has created ongoing liquidity and feasibility challenges for builders. Similarly, competition with the booming infrastructure sector for skilled trades is likely to persist for several years at least.”
Looking ahead, Mr Lawless said there was room for optimism with higher prices across the established housing market that could support the feasibility of new projects. Also, the recent trend in dwelling approvals has been encouraging, with approvals rising to be roughly in line with the decade average.
Australian property values reached new heights in March, reversing a recent downward trend, according to CoreLogic’s national Home Value Index. Values increased 0.4 per cent over the month, the second consecutive month of growth in the national index, following a short three-month decline where values dipped 0.5 per cent.
Queensland recorded the highest quarterly rise in construction costs at 0.6 per cent, although this represents a significant slowdown from the 1.2 per cent increase recorded in the previous quarter.
Western Australia followed with a 0.5 per cent increase, while New South Wales saw costs rise 0.4 per cent.
Victoria and South Australia recorded the smallest quarterly increase at 0.3 per cent.