New Home Costs Climb
After a brief slowdown, construction costs in Australia are once again on the rise, reversing last year’s trend. While the cost of building a new home increased by over 20% in the 12 months to September 2022, the growth rate had slowed to 3.9% by September 2023.
However, recent data shows an alarming resurgence in cost increases, impacting housing supply and affordability nationwide. Labour shortages, particularly in finishing trades, and year-on-year wage hikes remain key drivers of the cost surge. The Australian Bureau of Statistics highlights strong union activity as a factor contributing to low productivity, further exacerbating costs.
Though the prices of some building materials, like timber and steel, have decreased, costs for essentials like bricks, plaster, and copper continue to rise. Copper prices, driven by demand in green energy and electric vehicles, are particularly concerning.
The escalating construction costs are widening the price gap between new and existing homes, contributing to fewer new builds and pushing up existing property prices across Australia, especially in the residential sector.
