QLD tops growth in building costs

first_imgQueensland may not have the most expensive house building costs per square metre, but it has grown the most rapidly over the last 20 years.SYDNEY and Melbourne may have had the housing booms but it’s Queensland that’s borne the brunt of the highest growth in building costs, new industry analysis has revealed.The latest Cordell Housing Index Price (CHIP), which tracks acceleration in the rate of growth in construction costs, put the Sunshine State at the highest level of all states at 288.3.Compare that to NSW which was on 271.0 and Victoria’s 262.7 and the pace of rising costs is alarming.It found that in the last 20 years, the Queensland CHIP index averaged 7.2 points higher than the national figure, “suggesting that Queensland may be subject to inherently high input costs for building houses”.CoreLogic commercial research analyst Eliza Owen told The Courier-Mail that the index measured the growth in the price of construction, not the costs themselves.“What that suggests is that Queensland may not have the most expensive house building costs per square metre, but it has grown the most rapidly over the last 20 years,” she said.“I would expect that NSW and Victoria still have inherently higher costs but in Queensland we’ve seen periods of really rapid growth in the cost of building.”Labour costs were not to blame, according to the research. “If we look at unemployment in the construction sector, it averaged 5 per cent between 2012 and 2017 which is higher than the aggregate unemployment rate. That suggests that it’s not really tightness in labour force, it suggests it could be more about capacity to attract labour.”More from newsParks and wildlife the new lust-haves post coronavirus21 hours agoNoosa’s best beachfront penthouse is about to hit the market21 hours agoQueensland’s cost index averaged 7.2 pts higher than the national figure in the last 20 years.Instances like the 2011 floods saw spikes in the cost of building materials and demand as repairs soared, she said. During that time, the state Consumer Price Index grew above the national rate of 0.9 per cent, at 2.4 per cent.“The 2011 floods in Brisbane would have required a lot of rebuilding and placed pressure on material inputs for buildings. It could have made them more scarce in the region which pushed prices up,” Ms Owen said. “(And) with mining concentrated in Queensland it (too) could be placing high demand for building materials.”Distance was also a factor, she said.“It could also be a freight situation because Queensland housing markets are more spread across the state — the Sunshine Coast, Gold Coast and Brisbane as opposed to areas like Sydney and Melbourne where the housing markets are relatively more concentrated. That could be a factor if building materials have to travel a long way.”Ms Owen said there was some hope that as the construction industry grew in the state “the distribution of materials might become more scalable”.“We might see more building manufacturers setting up especially if there are higher margins to be gained in the state. That might attract more building materials companies.”The good news is that in the past year, the acceleration in costs has slowed with Queensland posting low annual growth in its CHIP index at 3.4 per cent, while NSW rose 4 per cent and Victoria saw its cost index rise the highest at 5 per cent. FOLLOW SOPHIE FOSTER ON FACEBOOKlast_img

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