Costs associated with the construction component of building new homes continue to outpace the rate of inflation, the latest data has found.
In its latest report, CoreLogic said its Cordell Housing Index Price (CHIP) rose by 1.0 percent over the March quarter and is up by 3.6 percent over the past year.
This outstrips the rate of inflation, whereby the consumer price index (CPI) rose by just 0.3 percent during the March quarter and by 2,2 percent over the year.
In terms of states:
- Queensland is experiencing the steepest rise in housing construction costs, with the CHIP for that state rising by 1.1 percent in the March quarter and by 4.0 percent for the year.
- In Victoria, the CHIP was up by 1.0 percent for the quarter and 3.8 percent over the year
- In NSW, the CHIP rose by 0.9 percent for the quarter and 3.6 percent for the year.
- In Western Australia, CHIP rose by 1.0 percent during the quarter and 2.9 percent over the year.
- In South Australia, CIHIP rose by 1.0 percent for the quarter and 2.8 percent for the year.
In its report, CoreLogic said the impact of COVID-19 on housing construction costs was difficult to predict with certainty.
Nevertheless, it said COVID-19 would most likely have a deflationary effect as surplus labour becomes available and new project commencement slows.
The index measures the construction in construction costs within the residential market.
It covers freestanding and semi-detached single and doubles storey homes.
All up, carpentry and joinery make up the biggest portion of the CHIP, accounting for more than 20 percent of the index.
This is followed by excavation and concrete work, preliminaries, roofing & insulation, plumbing & drainage, brickwork, painting & tiling, plastering, electrical services, windows & glazing and doors & hardware.