After years of unprecedented accelerated growth, residential construction costs have stabilised, but remain elevated, CoreLogic’s Cordell Construction Cost Index (CCCI) shows.
The Q2 2024 national CCCI, which tracks the cost to build a typical new dwelling, recorded a 0.5 per cent rise, a further slowing from the 0.8 per cent increase recorded in Q1.
During FY24, annual costs increased 2.6 per cent.
CoreLogic Research Director Tim Lawless said while the quarterly growth in residential construction costs was tracking 50 basis points below the pre-COVID decade average of one per cent, price levels remain elevated.
“The growth in costs has finally returned within normal margins, however the price of construction is not falling and building or renovating remains almost 30% more expensive now than pre-COVID after an extended period of escalating costs,” Mr Lawless said.
“It’s likely the easing in the growth of construction costs over the past six months, alongside higher established housing prices, will gradually help to repair builder profit margins and flow through to providing more confidence around pricing for new builds and renovations.”
On a state-by-state basis, the quarterly change in CCCI remains reasonably aligned, ranging from 0.3 peer cent in Queensland to 0.6 per cent in NSW and Victoria.
CoreLogic Construction Cost Estimation Manager John Bennett said the Cordell costings team found the overall de-escalation in construction cost increases was due to reduced pricing volatility among materials.
He said some categories, such as timbers and metal products, which are significant for residential construction for framing, trusses, floors, cladding and roofing, have also seen a reduction in price.
“Although some categories are registering a fall in price, there are multiple factors that make up the cost to build,” Mr Bennett said.
“Sustained issues across the supply chain, which plagued the industry throughout COVID have largely resolved but costs for labour for example remain elevated and contribute significantly to any residential project.”