The cost of building a home is tipped to keep rising at above average rates as timber and metal prices go up.
The latest Cordell Construction Cost Index predicts supply chain disruptions will keep costs rising at least in the first quarter of this year.
The report, which measures construction costs in the residential market, found that in 2021 building costs rose at their highest rate since March 2005, mainly because of the rising cost of timber.
CoreLogic head of research Tim Lawless says, with timber and metal products remaining in short supply, some projects this year will be delayed or run over budget.
“With such a large rise in construction costs over the year, we could see this translating into more expensive new homes and bigger renovation costs, ultimately placing additional upwards pressure on inflation,” he says.
A number of construction companies have folded recently as a result of the rising costs.
Construction-industry insolvencies increased by nearly 40% in the December Quarter, compared with the previous quarter.
Costs rose fastest in the December Quarter in Victoria where they went up by 1.2%. In Queensland, Western Australia and South Australia it increased 1.1%, and in NSW by 1%.