Construction costs associated with building low-density housing are back on the rise, the latest data indicates.

Releasing its latest Cordell Housing Index Price, real-estate and construction services firm CoreLogic has measured construction cost growth for freestanding detached homes along with semi-detached single and double storey dwellings.

It said costs rose by 1.0 percent over the three months to December – eclipsing its previous quarter’s growth of 0.6 percent.

Over the past year, housing construction costs have increased by 3.6 percent.

Queensland led the way (major states only) with cost increases of 1.8 percent for the quarter and 4.5 percent for the year.

This was followed by Victoria (1.0 percent for the quarter or 3.7 percent year-on-year), Western Australia (0.7 percent qtr./3.2 percent YoY), New South Wales (0.7 percent qtr./3.1 percent YoY) and South Australia (0.7 percent qtr./3.0 percent YoY).

On a weighted basis (in order of importance), the Cordell index incorporates costs from carpentry and joinery, excavation and concrete work, preliminaries, roofing insulation and roof panels, plumbing and drainage, brickwork, painting and tiling, plastering, electrical services and sundry appliances, windows and glazing and doors and hardware.

The latest data implies a stronger rate of cost growth for new home construction compared with that implied by other sources.

In terms of construction materials, for example, the Producer Price Index report from the Australian Bureau of Statistics indicates that building material prices for inputs to new home construction rose by only 1.8 percent over calendar 2020.

Cement product price increases of 2.8 percent were the main driver of this.

Price increases were softer for items such as plumbing and other metals, where prices rose by only 0.4 percent.

Construction wages, meanwhile, increased by only 1.1 percent last year, according to the ABS Wage Price Index.

Tim Lawless, Executive Director of Research at CoreLogic, says cost pressures are building in-line with a surge in new residential house building activity arising out of HomeBuilder.

Even after HomeBuilder ends in March, Lawless says cost growth in housing construction was likely to continue as builders work through the pipeline of new house approvals which has surged during the second half of last year.

“With dwelling approvals for houses at record highs, it’s likely we will see additional pressure growing on constructions costs as demand continues to build for residential construction materials and resources,” Lawless said.