Why are building costs so high?
Building costs just increased by 7.3%, which is the highest annual growth rate since March 2005.
Property market data company CoreLogic is expecting growth in residential construction costs to remain above average as supply chain disruptions persist.
“There is a significant amount of residential construction work in the pipeline that has been approved but not yet completed,” explains CoreLogic research director Tim Lawless.
So what materials are getting more expensive and harder to source?
Data shows that cost increases are being driven primarily by timber (mostly structural timber).
In fact, the value of select wood imports recently reached their highest level on record, says Housing Industry Association (HIA) economist Thomas Devitt.
Other segments of the market also remain volatile, with increasing pressure currently on metal costs.
Mr Lawless says: “With such a large rise in construction costs over the year, we could see this translating into more expensive new homes and bigger renovation costs, ultimately placing additional upwards pressure on inflation.”
Higher building costs are likely to add to affordability challenges in the established housing market, making it harder for homeowners to upgrade.
Get in touch and explore your options today
Finding the right kind of finance for a construction project can be tricky at the best of times – let alone when building supplies are becoming more expensive and wait times are blowing out due to supply constraints.
So if you’d like to explore your options for your next building or reno project, then get in touch today – we’d love to help you map out a plan for your building and property goals.
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