Construction Costs Back To Normal
After three solid years of price rises residential construction costs are returning to more normalised levels of growth.
The Cordell Construction Cost Index (CCCI), which tracks the cost to build a typical new dwelling, shows a national growth rate of just 0.8% over the final three months of 2023.
CoreLogic Economist Kaytlin Ezzy says the annual growth rate for 2023 was 2.9%. This was the smallest 12-month annual increase since 2007.
"This suggests that growth in construction costs have normalised after recording a recent peak of 11.9% over the 12 months to December 2022,” Ezzy says.
CoreLogic Construction Cost Estimation Manager John Bennett says there have been increases in the price of hardware and chemical items.
Price rises varied across the states, with an increased growth rate seen in New South Wales, Victoria and Western Australia and a drop in the rate of growth in South Australia and Queensland.
Ezzy says the market is unlikely to experience a drop in construction costs, but she predicts a recent lull in approvals could result in a shortfall in new projects, which would help keep growth in building costs low, due to greater capacity in the construction sector.
She says the normalisation in construction price growth will help provide some certainty for builders, insurance companies and homeowners alike.
