Residential construction costs in Australia have continued to rise in recent quarters, even surpassing the growth in the Consumer Price Index (CPI) in June.
CoreLogic's Cordell Housing Price Index (CHIP) results showed construction costs were 1.4% higher than the June quarter.
This is the largest quarterly increase since 2014. In the same quarter, the CPI registered an increase of 0.8%.
Two factors played a role during the period: the increasing demand and the shortage of building materials such as lumber, PVC piping and fittings.
Housing approvals still high despite recent declines
While monthly housing approvals moderated in June and May, the early-year hike kept the numbers afloat.
The approvals pipeline peaked in March, after significant increases of 19.1% in February and 16% in March.
In fiscal year 2020-21, the overall number of approvals was 27.3% higher than in the previous year.
Private sector approvals increased 42.8% during the period.
CoreLogic Research Director Tim Lawless said this increase in housing approvals over the past 12 months has laid the groundwork for an extended period of heightened construction activity across Australia.
"The large residential construction pipeline is likely to keep both building materials and trades in short supply for an extended period," Lawless said.
"I think we can expect housing construction costs to increase more significantly over the coming year as supply chains grapple with shortages. persistent.
“Higher construction costs will inevitably translate into higher costs for new homes and renovations. "
Construction costs increase at all levels
Construction spending increased in all five states monitored by CHIP, with South Australia posting the highest quarterly growth at 1.5%.
NSW recorded a substantial change over the period with 1.3%.
This was the first time construction costs in the state had increased by more than 1% since 2018.
WA also reported its largest increase in construction costs since 2015 at 1.4%.
On an annual basis, construction costs in Queensland registered the highest gains at 4.7%.
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