BUILDING DEMAND DRIVES 1.4% QUARTERLY INCREASE IN AUSTRALIA’S HOUSING CONSTRUCTION COSTS

CoreLogic’s national measure of residential construction costs show an increase of 1.4% in the three months to June 2021, outpacing the Consumer Price Index of 0.8% for the same period.

The latest Cordell Housing Index Price (CHIP) results show an annual growth rate of 3.9% and the largest quarterly change since the third quarter of 2014, when residential construction costs increased 1.5%.

Wide spread demand across the residential construction sector and a shortage of materials such as timber, PVC piping and fittings have contributed to the rise in costs with no sign of easing in the short-term.

Australia’s monthly dwelling approvals fell -6.7% in June in seasonally adjusted terms following a -7.6% decrease in May. The pipeline of approvals peaked in March after recording consecutive surges of 19.1% in February and 16.0% in March according to seasonally adjusted dwelling approval figures from the Australian Bureau of Statistics (ABS).

Total dwelling approvals in the 2020-21 financial year were 27.3% higher than in the 2019-20 financial year, in seasonally adjusted terms. This was driven by private sector house approvals, which were 42.8% higher in 2020-21 than 2019-20.

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