GENERAL NEWS
THE construction sector of Australia is reeling as construction costs and interest rates continue to cause the collapse of companies.
It’s been an ongoing domino effect within the Australian property market with something seemingly always standing in the way or causing further issues.
Construction costs reached a new high in January after recording the greatest annual increase on record – outside of the period following the introduction of the GST.
CoreLogic’s Cordell Construction Cost Index (CCCI) was up 11.9% over the 2022 calendar year – a big rise from the 7.3% increase over 2021.
The quarterly growth rate did show some positives with the December rate at 1.9%, down from 4.7% in September.
Building approvals have been hit steeply as a result of construction costs slowing progress down immensely.
Total dwellings in seasonally adjusted terms fell 27.6% which is the largest national drop since 1980 on record. NSW endured the...
CoreLogic Construction Cost estimation manager, John Bennett listed some of the reasons why we’ve seen such an increase in construction prices...
“The biggest contributors currently are volatile timber prices, with fluctuations in structural timber costs and general increases to timber products...
“Petrol rises are affecting cartage and delivery costs, notably concrete, however larger items such as rainwater tanks are also affected.
Inflation has been a major factor affecting industries in the past couple of years in Australia and it was revealed by the ABS in October that construction costs were a main driver behind this.
Australia’s annual inflation rate sat at 7.4% in January, up from 7.3% in the September quarter when ABS prices program manager Michelle Marquardt explained the...
“Labour shortages in the house construction industry, leading to rises in labour costs, contributed to the rise in...
The growth of the country’s inflation has led to the RBA attempting to combat it by repeatedly heightening Australia’s interest rates.
After ten consecutive hikes, the interest rates are well and truly causing a stir in the property market, leading to less housing affordability and more rental demand.
The problem with more rental demand however is the drought of supply Australia has been worsening.
It presented an enormous challenge as labour shortages and rising costs due to a lack of key materials have led to lengthy delays for a number of projects.
Construction companies have collapsed due to rising costs and interest rates and that trend could continue. Sydney developer EQ Constructions collapsed in February...
Research director of CoreLogic Tim Lawless does see some light on the horizon, predicting construction costs to ease – although it may be too late for some companies.
Although a large number of homes remain under construction, the dwindling number of approved homes in the construction pipeline should...
A reduction in growth associated with the cost of building a new home should gradually flow through to less inflationary pressures from the housing sector through the year,” Lawless added.