It has become more expensive to build a home in Australia almost a year into the COVID-19 pandemic, according to CoreLogic's latest Cordell Housing Index Price (CHIP).
The CHIP index, which measures the rate of change of construction costs within the residential market segment, ended 2020 at 3.6%. Tim Lawless, executive director of research at CoreLogic, said this substantial increase was due to the build-up towards the end of the year, as homebuilding activity surged.
“With dwelling approvals for houses at record highs, it’s likely we will see additional pressure growing on constructions costs as demand continues to build for residential construction materials and resources," he said.
The Australian Bureau of Statistics reported a 2.6% increase in the total number of dwellings approved in November. At the same time, the employment in the construction industry has increased.
Lawless said there is a high chance that this upward trend in construction costs will continue even after the deadline of the HomeBuilder scheme in March.
"It will take some time for builders to work through the pipeline of house approvals that have surged through the second half of last year,” he said.
Queensland registered the highest increase in construction costs, up by 1.8%. Victoria followed with a 1% gain in building costs. New South Wales, South Australia, and Western Australia also reported increases at 0.7%.