Prices and costs in Australia’s construction sector are rising faster than ever before, new data shows.

Releasing its latest Producer Price Index report, the Australian Bureau of Statistics says that overall output prices across the Australian construction sector rose by 3.8 percent in the June quarter and by 12.2 percent over the year to June.

At this level, prices registered both their fastest quarterly and yearly increase since the data began in 1996.

Leading the way was housing construction, where prices rose 6.0 percent during the quarter and 19.8 percent over the year.

This is followed by heavy/civil engineering construction (prices up 2.8 percent/9.0 percent over the quarter/year), non-residential building construction (2.7 percent/8.8 percent) and other residential building (units, townhouses apartments) (2.4 percent/7.7 percent).

In addition to output prices, the report indicates that material input prices specific to detached home-building rose by 4.3 percent during the quarter and by 17.3 percent for the year (input/material prices are only provided for detached housing).

On materials, across the six largest capitals combined:

  • Prices for steel products have risen by 39.13 percent over the past year although price growth has moderated (4.01 percent) in the June quarter. This is being driven by increases for reinforcing steel (up 42.19 percent) and steel beams and sections (up 37.59 percent).
  • Prices for timber, board and joinery products have increased by 6.95 percent for the quarter and by 24.22 percent for the year. This is driven by price surges of 40.72 percent, 35.62 percent, 31.4 percent and 27.92 percent for structural timber, plywood and board, timber windows and timber doors
  • Prices for other metals increased by 3.3 percent during the June quarter and by 18.1 percent over the year driven by increases in prices for aluminum windows and doors (21.84 percent), metal roofing and guttering (20.49 percent), metal garage doors (18.19 percent) and copper pipes and fittings (16.13 percent).
  • Prices for ceramic projects increased by 3.51 percent/14.67 percent for the quarter/year on account of a 26.53 percent increase in prices for terracotta tiles.
  • Prices for other materials increased by 2.76 percent over the quarter and 11.96 percent over the past twelve months amid strong increases in prices for insulation (22.36 percent) and glass/mirrors (21.96 percent).
  • Prices for electric equipment rose by 11.72 percent over the past twelve months on account of 18.64 percent increases in prices for electrical cable
  • Prices for plumbing products rose by 2.07 percent over the quarter and 10.79 percent over the year driven by an 18.27 percent increase in prices for plastic, pipe and fittings.

The data came as separate data from Housing Industry Association also showed a 9.5 percent increase in residential trade prices over the past twelve months amid a surge in prices for bricklayers, carpenters, painters and plasterers.

The latest data comes as the construction sector faces massive cost pressures on account of strong demand from record levels of activity in detached housing and civil infrastructure along with supply related disruptions associated with COVID and the Ukraine war.

Speaking of housing construction prices, the ABS says prices are being driven by rising freight costs, tightened supply for timber and metals (which is also causing project delays) and a shortage of skilled trades.

Turning to heavy and civil engineering construction, the ABS says prices are being driven by higher costs for steel, raw materials, crude oil and freight, supply chain volatility and strong international and domestic demand for roads, bridges and other transport infrastructure.

Finally, cost increases in other residential building construction and non-residential building construction are being driven by greater material costs for steel, concrete and reinforcement whilst rising prices for diesel fuel has driven higher freight and operating costs.

Meanwhile, strong activity in detached housing, civil infrastructure and mining construction has impacted wage and labor costs for commercial, public and multi-residential building due to pressures on labor supply and wage costs for skilled trades.

 

Enjoying Sourceable articles? Subscribe for Free and receive daily updates of all articles which are published on our site

Want to grow your sales, reach more new clients and expand your client base across Australia’s design and construction sector?Advertise on Sourceable and have your business seen by the thousands of architects, engineers, builders/construction contractors, subcontractors/trade contractors, property developers and building industry suppliers who read our stories across the civil, commercial and residential construction sector