Home builders

Homebuilders hit as construction costs hit 17-year high

National construction costs rose 7.3% through 2021, the highest annual growth rate in nearly 17 years, which “will impact all homeowners and investors.”

Despite a slowdown in the quarterly growth rate in the second half of 2021, domestic construction costs recorded the highest annual growth rate since March 2005.

In the three months to September 2021, construction costs jumped 3.8%, but then dipped to 1.1% in the December quarter.

This most recent result brings the quarterly trend back to the five-year average of 1.3%, which is also lower than the consumer price index (CPI) for the same period.

Rising construction costs replace house price growth of 22.4% over the year.

CoreLogic research director Tim Lawless said growth in residential construction costs is still expected to remain “above average” in the next quarter due to supply chain disruptions.

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

“With certain materials such as wood and metal products reportedly remaining in short supply, it is possible that some residential projects could be delayed or over budget.”

The median price of land has also increased by 12.6% in the year to September 2021, with a recent report from HIA-CoreLogic noting that the “significant” increase in land price indicates that supply is not not follow the request.

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 additional upward pressure on inflation.” , Mr. Lawless said.

CoreLogic’s head of insurance solutions, Matthew Walker, said rising construction costs are not just affecting renovators, builders and businesses, but all property owners and investors.

“In these times of rapidly rising housing and construction costs, underinsurance can quickly become a real threat to what is a most valuable asset,” Walker said.

“It’s important that homeowners keep track of their sum insured and check annually that it’s sufficient should the worst happen by using their insurer’s rebuild calculator or by calling them.”


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The entire market has not been taken into account in the selection of the products above. Instead, a reduced portion of the market was considered. Products from some vendors may not be available in all states. To be considered, the product and price must be clearly published on the product supplier’s website. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au and Performance Drive are part of the Savings Media group. In the interest of full disclosure, Savings Media Group is associated with Firstmac Group. To learn how Savings Media Group handles potential conflicts of interest, as well as how we are paid, please visit the website links at the bottom of this page.