More Australians are expected to wait a little longer before they can open the doors to their new home.
According to CoreLogic’s latest Cordell Construction Cost Index (CCCI), rising construction costs are expected to be a factor that will delay some residential projects.
In fact, national construction costs increased by 7.3% over 2021, the highest annual growth rate since March 2005.
CoreLogic Research Director Tim Lawless said construction costs will likely remain above average over the coming quarters as disruptions persist.
“There is a significant amount of residential construction work in the pipeline that has been approved but not yet completed,” Mr Lawless said.
“With some materials such as timber and metal products reportedly remaining in short supply, there is the possibility some residential projects will be delayed or run over budget.”
The latest set of data shows that cost increases are being driven primarily by timber and metal.
“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,” said Mr Lawless.
While most states recorded an easing in quarterly growth in construction costs, they still reported recent highs in terms of annual growth.
For instance, while construction costs in New South Wales only grew by 1% in the December quarter, yearly gains have reached 7%.
This was also apparent in Victoria, where construction costs only increased by 1.1% over the quarter but posted a 7.1% gain annually.
CoreLogic head of insurance solutions Matthew Walker said the rising construction costs pose a challenge to home renovators, builders, homeowners, and property investors.
“In these times of rapidly rising home and construction costs, under insurance can quickly become a real threat to what is a most valuable asset,” he said.
“It’s important that homeowners keep track of their sum insured and annually check that it is sufficient should the worst occur.”
Photo by @josholalde on Unsplash
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