Residential construction costs continue to moderate, increasing by just 2.3% in the year to March, according to the Cordell Construction Cost Index, published by property data company CoreLogic.
The Index tracks various costs within the residential building industry, including labour, materials, plant hire and subcontracting services, and uses those to estimate the cost of building a 'standard' single level, three bedroom/two bathroom, brick and tile house.
Those costs increased by 0.5% in the first quarter (Q1) of this year, continuing their steady decline from their recent peak of 3.4% in Q3 2022.
On an annual basis, construction cost increases have declined from their peak of 10.4% in Q4 2022, to 2.3% in Q1 2024, which is the lowest rate of cost inflation since Q3 2016.
CoreLogic chief property economist Kelvin Davidson said construction costs spiked during 2022, due to lingering Covid-affected supply chain issues and booming construction activity.
"Supply chains have normalised and house building activity has also pulled back, easing the pressure on capacity and therefore cost growth," Davidson said.
"Flatter costs mean builders can price jobs more accurately, and consumers can be more confident that their final price won't have spiralled by the time a job has been completed," he said.
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7 Comments
Wonderful news. And I like the picture of To The Point, DGM, and Yvil enjoying a beer together to celebrate after a hard day's work.
LOL. I nearly had coffee exit my nostrils..
Looking forward to seeing building costs collapse to sustainable levels when the materials oligopoly loses its stranglehold. With the collapse of real estate it might become profitable again to create value by building, much healthier.
The only way property prices will ever collapse, is if we see 7%+ unemployment again.
Building costs continue to rise as a consequence of eg, new insulation levels which can add $30,000.00 to a modest build. So - in some few cases there might be a slight reduction in the unit cost - offset by the fact that we must know use twice as much. And there are more changes ahead that will add yet again to cost. ( CO2 emmissions, Ventilation etc etc ) All of these changes are totally outside the control of the builder. Most builds now require a TC1, TC2 or TC3 type foundation. A TC1 foundation - the lowest level - will add about $10,000.00 extra cost over & above a standard foundation .
The only costs coming down are the Subbies dropping their pants to get work. Meanwhile the large monopolies are still living in cost plus Lala Land
Especially true in the parts of the country where there are franchise duopolies operating.
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