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Construction cost inflation set to trend lower over next 12 months
Costs will now increase at more normal rate, but from a higher base
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Macromonitor has just published a new edition of our report: Australian Construction Cost Trends - 2023. This new report provides detailed escalation projections for all types of construction costs in Australia.
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Australia’s surging rate of construction cost inflation will persist for the first half of 2023, but then return to more normal rates, for all sectors, in the remainder of calendar 2023. Note, however, that we do not expect costs to drop back again following the current surge – rather we expect costs to continue rising from the new, higher base, albeit at more normal rates of increase (as per the chart below).
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If your organisation requires help with project cost escalation forecasts, please get in touch with us, at info@macromonitor.com.au.
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There were signs of an easing in inflation in late 2022, as a number of items passed their peak in inflation rates, or even began to see falling prices. For example, there were declines in steel products and other metals products, copper cable and wire, electrical equipment, fuel and oil-related plastics prices.
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The acceleration in inflation during 2022 was caused by high levels and building and construction work (including renovations), capacity constraints in the industry, supply shortages for various inputs, tight labour supply and the impact of high global commodity prices (mainly metals and oil). These factors caused an overall construction cost increase in Australia, in 2022, of around 11% (averaged across all industries and regions).
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Cost inflation should ease back to around 7% in the year to June 2023, followed by a more normal rate, closer to 2%, in the year to June 2024.
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Our new report provides detailed escalation forecasts for all cost inputs (including each type of material, labour, fuel, equipment and services), and for each building and construction segment (including houses, commercial building, resources, roads and other infrastructure).
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This report is an invaluable resource for any organisation requiring cost escalation projections or inputs into cost planning.
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Our most recent reports:
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Australian Construction Cost Trends
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This report examines the outlook for construction costs, in detail be sector and type of input.
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Australian Construction Projects Database
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This latest list of projects corresponds with our fully revised set of forecasts published in November 2023.
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Australian Regional Construction Outlook
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Our latest regional forecasts for residential building and construction have just been released.
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Australian Construction Materials Forecasts
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Our latest forecasts assess the implications for construction materials demand of the current outlook for building and construction.
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Australian Road and Bridge Works
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This report examines the strength and composition of the current upturn, and determines the likely timing of the peak, and subsequent decline.
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