WA records steady growth in construction costs

Construction costs in the state remained steady at a 0.7 per cent growth, while the national rate continues to stablise in the recent quarter, the latest data shows.

CoreLogic today published its Cordell Construction Cost index for the first quarter of 2024, which tracks the costs to build a typical new dwelling across the country.

The index showed construction costs in Western Australia went up 0.7 per cent in the March 2024 quarter, on par with the 0.7 per cent rise recorded in the three months to December.

The national CCC index recorded a 0.8 per cent rise.

WA’s CCC index increased by 2.1 per cent, which CoreLogic claimed was the lowest annual change in construction costs in about seven years.

CoreLogic economist Kaytlin Ezzy said price levels remained elevated despite easing in the growth in national construction costs.

"The strong fluctuations seen in building material costs over the past few years have levelled out and are now within normal margins," she said.

"No clear trend was seen in timber or metal materials, with price changes normalising.

“Current building costs are still 27.6 per cent higher than at the start of the pandemic, which is likely putting significant pressure on builder's profit margins."

According to CoreLogic, Perth dwelling values went up 5.6 per cent in the three months to April, the biggest quarterly increase among the capital cities.

Perth’s median house value is $735,376 as of March 2024, CoreLogic said.

In regional WA, dwelling values increased by 4.6 per cent in the quarter, which CoreLogic said was the biggest quarterly increase of all rest of country’s regions.

The Australian Bureau of Statistics today also released data on dwelling commencements, reporting a low in WA with 3,022 projects recorded in the final quarter of 2023.

The figure is a 12 per cent drop on the previous corresponding period and a 36 per cent decrease from the 12 months prior.

WA's completion rate was improving, with 4,160 homes finished in the December quarter.

Ms Ezzy said the monthly detached dwelling approvals reported by the ABS was at its lowest count since mid-2012 and remained 13.5 per cent below the decade average in February.

"National dwelling approvals have held well below average in 2023 and are continuing to do so into 2024, helping to dampen the growth in construction costs," she said.

"However, the construction pipeline remains bloated, with ABS building activity data showing around 255,000 dwellings approved but not yet completed, which should help keep builders busy throughout 2024."