Rising Construction Costs Impact Renovators, New Home Buyers and Existing Property Owners

According to the latest CoreLogic Cordell Construction Cost Index (CCCI), residential construction costs nationally have increased 9% in the 12 months to March 2022. This marks the highest annual growth rate in construction costs since March 2001 following the introduction of GST, and impacts renovators, new home buyers and even existing property owners. 

CoreLogic Construction Cost Estimation Manager, John Bennett has stated that “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".

Imported construction materials have also been significantly impacted due to increased shipping costs, shipping delays and rising fuel costs. 

Who Is Impacted By Increases In Construction Costs?

Increasing construction costs and supply delays have obvious impacts on new building and renovation projects of course, however another important consideration is the sum insured by existing home owners. 

Construction costs have increased more than 25% in the past five years, and home owners are encouraged to assess their level of insurance to ensure they are appropriately covered should a claim need to be made. 

Will Higher Construction Costs Continue?

As CoreLogic Research Director Tim Lawless has commented, “Considering the record number of houses approved for construction during the HomeBuilder grant along with additional rebuild and repair work from the recent floods, demand for construction materials is likely to remain high.  

"A shortage of key materials such as structural timbers and metal products along with higher fuel costs, and labour shortages, is likely to keep upwards pressure on building costs for some time yet”.​