House building costs have continued to increase in 2022 with clear implications for general inflation rate measures.
The My Housing Market House Building Cost Index increased by 1.3% over the January quarter for an annual increase of 17.1%.
Although the rate of quarterly increase over January is lower compared to the rise over the previous December quarter of 1.6% – and the lowest increase since the May quarter 2021, the annual increase in house building costs is however clearly the highest on record.
The recent unprecedented surge in house building costs reflects the impact of the now-defunct federal government Home Builder initiative that acted to push demand well ahead of supply and resulted in shortages of labour and materials and placing upward pressure on building costs.
Perth reported the highest increase in house building costs of the major capitals over the January 2022 quarter at 3.2% followed by Sydney up 2.4% and Melbourne higher by 2.3%.
Sydney however has clearly reported the highest annual increase in house building costs – up by 20.9% followed by Brisbane higher by 16.0% and Melbourne up 15.1%.
Sydney also maintains the highest house building costs of all the capitals according to the My Housing Market Capital City House Building Costs Relativity Index – higher by 9.2% compared to Melbourne the next highest.
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