Despite an easing in the quarterly rate of growth in the second half of 2021, national construction costs had the highest annual growth rate since March 2005.

Over the three months to September 2021, construction costs surged 3.8% but then softened to 1.1% in the December quarter.

This most recent result brought the quarterly trend back in line with the five-year average of 1.3%, which is also below the Consumer Price Index (CPI) for the same period.

Rising construction costs are in lieu of property price growth at 22.4% through the year.

CoreLogic Research Director Tim Lawless said growth in residential construction costs is still expected to remain 'above average' over the coming quarter due to supply chain disruptions.

"There is a significant amount of residential construction work in the pipeline that has been approved but not yet completed," Mr Lawless said.

"With some materials such as timber and metal products reportedly remaining in short supply, there is the possibility some residential projects will be delayed or run over budget."

The median price of land also increased by 12.6% over the year to September 2021, with a recent report from HIA-CoreLogic pointing out that the 'significant' increase in the price of land indicates supply isn't keeping up with demand.

"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," Mr Lawless said.

CoreLogic Head of Insurance Solutions Matthew Walker said rising construction costs don't just impact renovators, builders and businesses, but all homeowners and property investors.

"In these times of rapidly rising home and construction costs, under insurance can quickly become a real threat to what is a most valuable asset," Mr Walker said.

"It’s important that home owners keep track of their sum insured and annually check that it is sufficient should the worst occur by using their insurer’s rebuild calculator or giving them a call."


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Building a home? This table below features construction loans with some of the lowest interest rates on the market.

Update resultsUpdate
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.14% p.a.
6.20% p.a.
$2,047
Interest-only
Variable
$0
$835
70%
6.43% p.a.
6.68% p.a.
$2,143
Interest-only
Variable
$0
$530
90%
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6.43% p.a.
6.68% p.a.
$2,143
Interest-only
Variable
$0
$530
90%
6.45% p.a.
6.20% p.a.
$2,515
Principal & Interest
Variable
$0
$1,520
60%
6.74% p.a.
6.42% p.a.
$2,247
Interest-only
Variable
$0
$600
90%
6.92% p.a.
6.95% p.a.
$2,307
Interest-only
Variable
$0
$300
80%
6.94% p.a.
7.19% p.a.
$2,313
Interest-only
Variable
$0
$530
80%
7.54% p.a.
7.45% p.a.
$2,513
Interest-only
Variable
$0
$500
80%
7.81% p.a.
7.84% p.a.
$2,882
Principal & Interest
Variable
$0
$600
69.99%
8.29% p.a.
8.62% p.a.
$3,016
Principal & Interest
Variable
$0
$0
80%
8.56% p.a.
8.58% p.a.
$2,853
Interest-only
Variable
$0
$600
69.99%
8.68% p.a.
8.75% p.a.
$2,893
Interest-only
Variable
$0
$800
95%
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

Image by Greyson Joralemon on Unsplash





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