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Growth in residential construction costs expected to slow in 2023

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Home building costs continue to rise sharply, but it appears the worst is behind us.

Residential construction costs rose 11.9% during 2022, after climbing 7.3% in 2021, according to CoreLogic’s Cordell Construction Cost Index (CCCI).

The 2022 result was the largest annual increase on record, apart from the period impacted by the introduction of the GST.

However, the pace of growth appears to be slowing: prices increased 4.7% in the September quarter, but only 1.9% in the December quarter.

CoreLogic construction cost estimation manager John Bennett said, in 2023, costs would be unlikely to rise at the same rapid pace as in the recent past, because rising interest rates and inflation have made consumers, builders and suppliers more cautious.

Analysing the price increases, Mr Bennett said:

    • Volatile timber prices are affecting the cost of structural timber and general timber products

    • Prices continue to increase for metal products, such as gutters, lintels and fixings, which are used for roofing and structural purposes

    • Petrol price increases are affecting cartage and delivery costs, including for concrete and rainwater tanks

    • Gravel, aggregates and fill prices have increased, possibly affected by the rise in petrol prices

    • Costs have also increased for appliances and fittings