Housing construction cost hike eases in Q3

The national Cordell Housing Index Price (CHIP) rose by 0.6 per cent over the three months to September 2020, after the previous quarter increased by a higher 0.9 per cent.

Annually, residential construction costs were 3.4 per cent higher annually, the index showed.

Looking across states and territories, the CHIP index for Victoria rose by 0.6 per cent over the three months to September 2020. This was the smallest quarterly increase in the index since the June 2019 quarter.

Queensland continues to report the highest CHIP index. Quarterly, this was up by 0.6 per cent, with annual growth the highest of all states, rising by 4.0 per cent.

Further, the CHIP index for WA increased by 0.7 per cent over the three months to September, which was slightly higher than the other states included in this analysis.

Of the Australian states and territories, South Australia still reports the lowest CHIP index. Quarterly growth in the SA CHIP index was recorded at 0.6 per cent over the three months to September.

Market data

According to the latest ABS figures, the number of dwellings approved fell -1.6 per cent in August in seasonally adjusted terms, following a 12.2 per cent increase in July. Employment in the construction industry, which accounts for around 9.2 per cent of the total workforce, fell -1.0 per cent over the three months to August 2020 (seasonally adjusted).

Further, CoreLogic’s home value index released in October saw national dwelling values fall -0.1 per cent over the month of September 2020. Still, despite being down over the month, the national index recorded was the smallest decline since values started to reduce in May this year.

Meanwhile, the most recent figures show the consumer price index (CPI) fell -1.9 per cent over the June 2020 quarter, compared with a rise of 0.3 per cent over the previous quarter, although the fall in CPI over the June quarter was largely driven by free childcare and price falls in automotive fuel.