The Australian building and construction industry has seen the fastest growth in construction costs since the introduction of the goods and services tax in 2001.
CoreLogic recently found that construction costs increased by nine per cent in the 12 months to March 2022, which is the highest annual growth rate on record outside of when the GST was introduced.
CoreLogic’s Construction Cost Estimation Manager, John Bennett said in a recent Nine News report that timber prices were most impacted.
“Timber costs continue to rise with cladding, decking and other timber items affected. Steep rises in metal prices are also now flowing through to the market, with structural steel, fixings and metal components hit hard.”
“We continued to see volatility in the rest of the market with imported products the most vulnerable due to elevated shipping costs. Rising fuel costs are also on the radar and we have continued to see further increases in the cost of other materials,” he said in the report.
However it seems rising costs in building materials are now impacting more than just builders, CoreLogic’s Research Director, Tim Lawless pointed out in the report.
“Construction cost growth adds a further element of uncertainty to new building projects and renovations as well as inflationary pressures to the economy. While the most obvious impact from high residential building costs are with builders, new home buyers and renovators, another important consideration is the sum insured by homeowners,” he said.
“With construction costs up more than 25 per cent over the past five years, it is important for homeowners to reassess their insurance terms and make sure they are adequately covered should they need to make a claim.”
“A shortage of key materials such as structural timbers and metal products along with higher fuel costs, and labour shortages, is likely to keep upward pressure on building costs for some time yet,” Mr Lawless said in the report.