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Housing construction costs continue to rise
New research has found that the growth in housing construction costs continues to outpace inflation.
According to CoreLogic’s latest residential construction costs report (Cordell Housing Index Price or CHIP), costs associated with housing construction continued to rise over the September quarter. This represents quarterly growth of 1.1 per cent and annual growth of 3.7 per cent.
State-by-state breakdown
NSW
September NSW CHIP Index: 291.5
Quarterly Growth: 1.2 per cent
Annual Growth: 4.3 per cent
VIC
September Vic CHIP Index: 279.3
Quarterly Growth: 1.2 per cent
Annual Growth: 3.9 per cent
QLD
September Qld CHIP Index: 304.7
Quarterly Growth: 1.0 per cent
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Annual Growth: 3.4 per cent
WA
September WA CHIP Index: 284.9
Quarterly Growth: 0.8 per cent
Annual Growth: 2.7 per cent
SA
September SA CHIP Index: 267.1
Quarterly Growth: 0.5 per cent
Annual Growth: 2.6 per cent
The research also pinpointed the “market influencers” driving this trend. It found that growth in employment within the construction industry is a key influencer, with employment rates increasing 1.2 per cent over the three months to August 2019, rising 0.5 per cent year-on-year. Over the past five years, employment in the construction industry has increased by 14.1 per cent, ABS statistics showed.
Another key influencer was touted as the RBA’s decision to lower the cash rate to record-low levels.
“Lower interest rates, together with a subtle loosening in credit policies and improved housing sentiment, [have] seen the housing market make further progress towards a recovery,” CoreLogic said.
Furthermore, dwelling approvals trending lower was also identified as a key influencer. According to CoreLogic, dwelling approvals are down 19 per cent in comparison with last year. “However, stronger housing conditions should help support the residential construction sector over time.”
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