Residential construction costs are accelerating at a record pace, according to the latest CoreLogic Cordell Construction Cost Index.
Home building costs rose 3.4% in the September quarter and 9.6% in the year to September – both records.
The Cordell index reflects the rate of change in the cost to build a 200sqm three-bedroom, two-bathroom, single-storey, brick-and-tile house.
CoreLogic chief property economist Kelvin Davidson said rising building costs were going hand in hand with a struggle to procure some materials. That, in turn, has led to an increase in building times.
“Looking ahead, I wouldn’t be surprised to see the rate of construction cost accelerate further, potentially to double-digits by the end of the year, before it starts to ease up into 2023,” he said.
In encouraging news, Mr Davidson said supply chain conditions had improved “in the past month or two”, with plasterboard, for example, becoming easier to find.
“This easing in cost growth will be very important in the longer term so developers and households aren’t dissuaded from taking the new-build path, which critically assists in boosting overall housing supply,” he said.
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