Rising construction costs beat 2005 record

CoreLogic Data Cordell Construction Cost Index (ICCC) for Q4 2021 indicates that despite national residential construction costs growing 1.1% in the December quarter, from an accelerated high of 3.8% in Q3, growth rates still jumped to 7.3% in calendar year 2021.

According to CoreLogic research director Tim Lawless, the national trend of trimming quarterly growth while annual growth remains at recent highs has been the same for all five states and territories included in the report.

Victoria saw the biggest increase in the fourth quarter at 1.2%, followed by Queensland, Western Australia and South Australia at 1.1% and New South Wales at 1%.

The easing of the latest quarterly growth rate brought the numbers back to the five-year average and below the consumer price index of 1.3% for the same period.

Lawless said any gains throughout the quarter could represent “some rebalancing in the index after the Q3 jump”.

But the lower rise may only be temporary, Lawless added, as construction supply chain challenges, such as the high volume of planned builds and shortages of wood and metal, could still push construction prices and home values ​​above the industry average.

“There is a significant amount of residential construction work in the pipeline that has been approved but not yet completed,” Lawless said.

And how can these market factors impact home buyers?

“With such an increase in construction costs over the course of the year, we could see this translate into more expensive new homes and higher renovation costs, which will ultimately put upward pressure inflation,” Lawless explained.

Matthew Walker, head of insurance solutions at CoreLogic, pointed out that in addition to renovators, builders and businesses, rising construction prices are also affecting property owners and investors who may be unaware of the risks associated with underdevelopment. -insurance of their assets.

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Rising construction costs beat 2005 record



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Last update: February 09, 2022

Posted: February 10, 2022