Australia’s residential construction costs increased by less than 1 per cent in the first three months of 2021, according to CoreLogic’s first Cordell Housing Index Price (CHIP) for the year.
The CHIP measures the rate of change in construction costs within the residential market and covers freestanding and semi-detached single and two-storey dwellings.
According to the March quarter CHIP, construction costs increased by 0.8 per cent over in the first three months of 2021.
Meanwhile, Australian Bureau of Statistics figures show the consumer price index (CPI) increased by 1.1 per cent over the year to March 2021.
According to seasonally adjusted ABS figures, the total number of dwellings approved rose by 17.4 per cent in March, after the total number of dwellings approved surged by 20.1 per cent in February.
The ABS also found employment in the construction industry, which accounts for around 8.9 per cent of the total workforce, fell 1.5 per cent over the three months to March 2021.
Australian home values increased by 2.8 per cent in March according to CoreLogic’s national home value index, which was the fastest rate of appreciation since October 1988.
The strong growth conditions remain broad-based, with values rising by at least 1.4 per cent in every capital city and ‘rest-of-state’ area over the month.
CoreLogic research director Tim Lawless said with dwelling approvals surging in response to the recently expired HomeBuilder grant, the residential construction sector was moving into what was likely to be an extended period of activity.
“However we are yet to see Cordell’s measure of construction costs reflect any material increase,” Mr Lawless said.
“Construction costs were up 0.8 per cent over the March quarter, slightly below the decade average rate of growth and with little in the way of variation across the states.
“Although construction costs rose at a slightly slower than average pace last quarter, it’s likely future quarters will record a more substantial lift in construction costs as shortages of both materials and labour add some upwards pressure on prices.
New South Wales’ CHIP index grew 0.7 per cent in the first three months of the year, bringing annual growth to 2.9 per cent.
Victoria’s CHIP index grew 0.8 per cent over the March quarter, with the state experiencing annual growth of 3.4 per cent, slightly higher than the national rate.
Queensland’s quarterly CHIP index growth dropped from 1.8 per cent in the three months to December to 0.8 per cent in the three months to March, bringing it back in line with the national growth rate.
South Australia’s CHIP index increased by 0.8 per cent over the March quarter and its annual growth remained the lowest of all states at 2.8 per cent, while Western Australia’s rose by 0.9 per cent over the March quarter and had annual growth of 3.1 per cent.
According to the latest New Zealand CoreLogic Cordell Housing Index Price (CHIP), released yesterday, housing construction costs across the Tasman rose by 1.3 per cent over the first quarter of 2021.