Greg Hankinson , Director - Metropole Constructions
There’s good news for homebuilders and property investors because the pace of construction cost growth has eased to its lowest level in over a decade, according to Cotality’s latest Cordell Construction Cost Index (CCCI).
While costs still rose 0.6% over the September quarter, annual growth has slowed to just 2.5%, which is well below the pre-COVID average of 4.0%. This marks the slowest annual increase since March 2002 and signals a welcome shift for those planning new builds or development projects.
For investors and homebuilders, this moderation in cost escalation improves project feasibility and reduces the risk of budget blowouts. It also provides a more stable environment for forward planning, especially as dwelling approvals rose 4.3% over the three months to August.
That said, the market remains nuanced. Western Australia saw the sharpest quarterly rise at 1.3%, while nationally, metal products led material price increases, according to the index. Labour costs also edged higher, driven by ongoing demand for skilled trades and the impact of annual wage agreements.
Despite these pressures, the broader trend is encouraging. After years of volatility, we’re seeing signs of stabilisation and that’s critical for unlocking new housing supply.
For homebuilders, this could be the window to move forward with delayed projects. For investors, it’s a chance to capitalise on a more predictable cost base while rental demand remains high and vacancy rates stay tight across the capitals.
The key is to act strategically by targeting locations with strong fundamentals, understanding your build costs, and partnering with experienced professionals who can navigate the complexities of today’s market.
With construction cost growth easing and demand for quality housing still outpacing supply, the conditions are aligning for well-timed investment and development.
