Growth in construction costs slows to lowest level in 15 years
Australia has recorded its lowest quarterly growth in residential construction costs in 15 years, signalling a possible shift in the industry after years of significant increases.
According to CoreLogic’s latest Cordell Construction Cost Index (CCCI), residential construction costs in Australia grew by just 0.4 per cent nationally over the March quarter, marking the slowest increase since March 2010.
The slowdown follows two consecutive quarters of 1 per cent growth, bringing the annual rise in construction costs to 2.9 per cent over the 12 months to March 2025, down from the 3.4 per cent annual increase recorded in December 2024.
CoreLogic data noted home building costs have consistently remained at or below the pre-COVID decade average of 4 per cent since the 2023 September quarter.
According to CoreLogic, Australian property values rose by 0.4 per cent in March, marking the second straight month of national growth and reversing a brief downward trend.
The increase follows a three-month declining trend where values dropped by 0.5 per cent.
In terms of construction costs, Queensland led the way with a quarterly increase of 0.6 per cent.
However, CoreLogic noted that this growth marks a significant slowdown from the previous quarter’s 1.2 per cent.
Western Australia followed with a 0.5 per cent increase, while NSW experienced a 0.4 per cent rise in costs.
Both Victoria and South Australia recorded the lowest growth rates in construction costs, each showing a modest increase of 0.3 per cent.
Research director of CoreLogic, Tim Lawless, said that while cost growth has eased, the cost of building a home remains elevated.
“The 31.3 per cent jump in construction costs since the onset of COVID-19 five years ago has created ongoing liquidity and feasibility challenges for builders,” Lawless said.
“Similarly, competition with the booming infrastructure sector for skilled trades is likely to persist for several years at least.”
Despite these pressures, Lawless said there is room for optimism as the latest dwelling approvals have aligned with the decade average, and rising property values can enhance the feasibility of new projects.