The Urban Developer
AdvertiseEventsWebinars
Urbanity
Awards
Sign In
Membership
Latest
Menu
Location
Sector
Category
Content
Type
Newsletters
Untitled design (8)
FULL PROGRAM RELEASED FOR URBANITY-25 CONNECTING PROPERTY LEADERS ACROSS THE ASIA PACIFIC
FULL PROGRAM RELEASED FOR URBANITY-25 WHERE THE PROPERTY INDUSTRY CONNECTS
VIEW FULL AGENDADETAILS
TheUrbanDeveloper
Follow
About
About Us
Membership
Awards
Events
Webinars
Listings
Resources
Terms & Conditions
Commenting Policy
Privacy Policy
Republishing Guidelines
Editorial Charter
Complaints Handling Policy
Contact
General Enquiries
Advertise
Contribution Enquiry
Project Submission
Membership Enquiry
Newsletter
Stay up to date and with the latest news, projects, deals and features.
Subscribe
ADVERTISEMENT
SHARE
print
Print
ConstructionMarisa WikramanayakeTue 15 Oct 24

Building Costs Climb Again, Threatening Housing Targets

Costs for building new homes have risen by 1 per cent nationally over the third quarter of 2024.

The cost of building homes has risen over the past quarter across Australia, according to CoreLogic’s Cordell Construction Cost Index (CCCI).

Costs increased by 1 per cent over the third quarter compared to the previous quarter.

It is a substantial rise—in comparison, costs increased by 0.5 per cent across the second quarter.

During the 12 months to September, costs rose 3.2 per cent compared to 2.6 per cent over the 12 months to June, 2024.

The costs were down compared to the 4 per cent increase over the 12 months to September, 2023.

CoreLogic economist Kaytlin Ezzy said increased costs would affect the national target of 1.2 million new homes.

“With the official start date for the Federal government’s target for 1.2 million new well-located homes over five years kicking off in July, the recent re-acceleration of the CCCI could put additional pressure on an already difficult-to-achieve goal,” Ezzy said.

“Over the year to June, approximately 176,000 dwellings were completed: 26.6 per cent below the 240,000 annually needed to fulfil the target.

“While 250,000 homes remain within the construction pipeline nationally, the sluggish flow of new dwelling approvals suggests a shortfall of projects once the backlog is worked through.”

National monthly approvals fell below the decade average in August by 17.9 per cent and were 30 per cent under the 20,000 a month needed to hit the 1.2 million new homes target. 

The Australian Bureau of Statistics reported that 44,853 homes had been completed during the second quarter of 2024.


Costs of building new homes

States and territoriesIncrease in new home build costs over Q3 2024 (%)Increase in new home build costs over 12 months to Sept 2024 (%)
Queensland1.12.2
Victoria0.83.5
New South Wales13.5
South Australia0.82.5
Western Australia12.8
National13.2



Source: CoreLogic Cordell Construction Costs Index, Q3 2024 


Queensland recorded the highest quarterly increase in construction costs at 1.1 per cent for the period, compared to 0.3 per cent of the previous quarter.

In NSW and Western Australia, construction costs increased 1 per cent over the third quarter, while Victoria and South Australia had for the lowest quarterly increase at 0.8 per cent.

The cost of construction materials stabilised over the quarter, according to CoreLogic construction cost estimation manager John Bennett. 

“This quarter has shown no standout specific trends in the market for construction cost materials,” Bennett said.

“We fully expect this to continue for the coming months.” 

Costs are being passed to the homebuyer with the ABS’s Consumer Price Index data rising 1 per cent over the second quarter with new home purchases by owner-occupiers increasing 1.1 per cent. 

“Residential building costs make up the largest share of the housing component of the consumer price index,” Ezzy said. 

“As a forward indicator, the recent re-acceleration in the CCCI is concerning for the new homes component of the CPI, as the two series are highly correlated.

“Additionally, the increase will be unwelcome news for builders, who are still working to repair profit margins.  

“Although the latest quarterly rise aligns with the pre-Covid decade average (1 per cent), overall construction costs have surged 29.5 per cent, putting significant pressure on the feasibility of many projects.”

The CCCI is based on building models that represent a three-bedroom, two-bathroom Australian home built with materials, practices and applications that adhere to what is considered as standard building practice. 

It does not represent bespoke or specialised style construction or materials and does not consider delays or associated costs for build times as part of the cost calculations.

The models consider labour as 40 per cent of the cost, plants and preliminary costs each as 5 per cent of the total cost and materials as 50 per cent of the cost. 

ResidentialAustraliaResearch
AUTHOR
Marisa Wikramanayake
The Urban Developer
More articles by this author
ADVERTISEMENT
TOP STORIES
Exclusive

Billbergia’s John Kinsella: Whiskey, Fun and a Fear of Heights

Vanessa Croll
8 Min
Exclusive

Paperwork to Plate: The Rise of Brisbane’s Midtown

Taryn Paris
6 Min
Wel Co's Thornhill Park, 40km west of the Melbourne CBD.
Exclusive

Waiting for Victoria: Why Wel.Co says State Planning isn’t Working

Marisa Wikramanayake
6 Min
Woods Bagot Principal Alex Hall and Penny Place Adelaide
Exclusive

Amplified Affordability: Woods Bagot Cracks Housing Cost Code

Leon Della Bosca
8 Min
Goodman Brisbane Industrial EDM
Exclusive

Olympics a ‘Springboard’ for Brisbane’s Industrial Age

Clare Burnett
6 Min
View All >
Mt Coot-tha EDM
Infrastructure

Vision Unveiled for Brisbane’s Mount Coot-tha Precinct

Clare Burnett
High-density residential construction in Melbourne
Finance

‘More Private Credit than Cranes’ But That’s About to Change for Melbourne

Taryn Paris
Nettleton Tribe Architects' rendering of the new Melbourne Pathology hub on the Costco Docklands site at 331-381 Footscray Road, Docklands.
Healthcare

City Considers Sonic’s Plans for Docklands Costco Site

Marisa Wikramanayake
An adaptive reuse project to create the Melbourne Pathology hub, generating $5.9 million for the area, is proposed…
LATEST
Mt Coot-tha EDM
Infrastructure

Vision Unveiled for Brisbane’s Mount Coot-tha Precinct

Clare Burnett
3 Min
High-density residential construction in Melbourne
Finance

‘More Private Credit than Cranes’ But That’s About to Change for Melbourne

Taryn Paris
7 Min
Nettleton Tribe Architects' rendering of the new Melbourne Pathology hub on the Costco Docklands site at 331-381 Footscray Road, Docklands.
Healthcare

City Considers Sonic’s Plans for Docklands Costco Site

Marisa Wikramanayake
2 Min
Ocean reef marina in perths northern beaches will include a new marina, business area, dining and homes
Development

Perth’s Ocean Reef Marina Development Site Sale Looms

Renee McKeown
2 Min
View All >
ADVERTISEMENT
Article originally posted at: https://theurbandeveloper.com/articles/cordell-corelogic-construction-cost-index-third-quarter-2024