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- In the June quarter, residential construction costs increased 1.4 per cent, outpacing the Consumer Price Index (CPI) of 0.8 per cent for the same period
- The most recent Cordell Housing Index Price (CHIP) findings indicate a 3.9 per cent annual growth rate and the highest quarterly shift since 2014
- Widespread demand in the home building sector, as well as a scarcity of supplies such as wood, PVC pipes and fittings have contributed to rising costs
- Queensland’s CHIP index rose 1.4 per cent in the third quarter, bringing the annual growth rate to 4.7 per cent, the highest in Australia.
In the three months leading up to the end of June 2021 CoreLogic’s national measure of home building costs increased by 1.4 per cent, surpassing the Consumer Price Index’s (CPI) 0.8 per cent gain.
The most recent Cordell Housing Index Price (CHIP) findings indicate a 3.9 per cent annual growth rate and the highest quarterly shift since the third quarter of 2014 when residential construction costs climbed 1.5 per cent.
Widespread demand in the home building sector — as well as a scarcity of supplies such as wood, PVC pipes and fittings — have all contributed to rising costs, which show no signs of abating in the near future.
Monthly housing approvals in Australia decreased 6.7 per cent in seasonally adjusted terms in June, following a 7.6 per cent drop in May.
According to seasonally adjusted dwelling approval statistics from the Australian Bureau of Statistics, the pipeline of approvals peaked in March after consecutive increases of 19.1 per cent in February and 16 per cent in March.
In seasonally adjusted terms, total housing approvals in the 2020-21 fiscal year were 27.3 per cent greater than in the 2019-20 fiscal year. This was fuelled by a 42.8 per cent increase in private sector home approvals in 2020-21 compared to 2019-20.
After falling by 1.6 per cent in the three months to February, employment in the construction industry, which employs roughly 8.8 per cent of Australia’s total workforce, climbed by 0.3 per cent in the three months to May 2021.
CoreLogic research director Tim Lawless said the construction sector was currently working through the early stages of what was set to be an extended period of heightened construction activity.
“The substantial pipeline of residential construction work is likely to keep both building materials and trades in short supply for an extended period of time,” he said.
“I think we can expect housing construction costs to rise more significantly over the coming year as supply chains grapple with ongoing shortages. Higher construction costs will inevitably flow through to higher costs for new homes and renovations.”
Queensland’s CHIP index rose 1.4 per cent in the third quarter, bringing the annual growth rate to 4.7 per cent, the highest in Australia, while in Western Australia costs climbed by 1.4 per cent, the highest rate of increase in construction costs since December 2015.
