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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