Construction Costs Climb, but Builders Rise to the Challenge

Australia’s construction industry is proving its resilience, even as residential construction costs rose 3.4% over the year to December 2024, according to CoreLogic’s Cordell Construction Cost Index (CCCI). While this marks the largest increase since September 2023, it’s not all doom and gloom—builders and industry players continue to adapt, innovate, and find ways to keep the wheels turning in this vital sector.

The pace of construction cost growth is settling into familiar territory, with quarterly increases returning to the pre-COVID decade average of 1.0% in the second half of 2024. It’s a sign that the industry is stabilising after a turbulent few years, though challenges remain. Since COVID-19 began, construction costs have surged by 30.8%, testing the creativity and perseverance of builders nationwide.

CoreLogic Economist Kaytlin Ezzy acknowledges the hurdles, from tight profit margins to labour shortages, but there’s no shortage of determination among Australia’s builders. While building commencements have hit a 10-year low and new dwelling approvals remain below the decade average, these setbacks are being met with grit and strategic thinking. Builders are offering clever discounts and promotions to win new business—proof that even in tough times, they’re finding ways to make things work.

Let’s not forget the innovations emerging in material costs. While concrete blocks saw a 15% price drop, plumbing PEX fittings and pipework rose by 5%. As CoreLogic’s Construction Cost Estimation Manager John Bennett puts it, “It’s a mixed bag, but labour costs remain a consistent driver.” Despite the ups and downs, builders are balancing the scales and keeping their projects moving forward.

Across the states, Queensland led the charge with a 1.2% quarterly increase in construction costs, while New South Wales, Victoria, and Western Australia held steady at 1.0%. South Australia saw the smallest rise at 0.9%, proving there’s variation in how regions tackle the industry’s challenges.

What’s clear is that Australia’s construction industry is a community of problem-solvers, always finding ways to overcome obstacles. The recent surge in insolvencies—2,832 construction companies in the 2023-2024 financial year—is a sobering reminder of the stakes. But it’s also a rallying call for collaboration, innovation, and determination to rebuild stronger.

As builders rise to the occasion, the sector’s role in shaping Australia’s future becomes even more apparent. Whether through new technologies, smarter designs, or creative approaches to cost management, the construction industry continues to inspire. It’s not just about building homes—it’s about building careers, communities, and opportunities.

So here’s to Australia’s builders—the dreamers and doers who take on challenges head-on, paving the way for a stronger, brighter future. With their unwavering commitment, there’s every reason to believe the best is yet to come.