Costs associated with the construction component of building new homes are on the rise throughout Australia as the shortage of labour and materials continues, the latest data shows.

Releasing the latest edition of its Cordell Housing Price Index, real-estate and property information services firm Cordell said that the average cost of the construction component associated with building freestanding, semi-detached and two-storey homes rose throughout Australia by 1.4 percent in the June quarter and is growing at an annualised rate of 3.9 percent.

At this level, costs rose at their fastest pace sine the third quarter of 2014.

With the Consumer Price Index gaining only 0.8 points during the period, meanwhile, the escalation in housing construction costs is far outpacing the general rate of inflation.

The increase was spread across all states, with South Australia, Victoria, Queensland, Western Australia and New South Wales recording increases of 1.5 percent, 1.4 percent, 1.4 percent, 1.4 percent and 1.3 percent respectively.

The latest results come amid ongoing challenges in trade and material availability.

In turn, this is being driven by supply constraints along with record levels of demand for detached homebuilding following the Commonwealth Homebuilder program.

On materials, there is an ongoing shortage and upward pricing pressure for products such as timber, PVC piping and fittings.

Whilst cost increases had previously been absorbed by suppliers, Cordell says these are now being passed on to builders, tradespeople and consumers.

On trades, a recent HIA report found that all trades in residential construction are in shortfall whilst substantial trade price increases are evident in sectors such as roofing, site preparation, bricklaying and plumbing.

Going forward, CoreLogic Research Director Tim Lawless says cost pressures are likely to intensify.

He says this will eventually lead through to higher costs for new home building and home renovations.

“The substantial pipeline of residential construction work is likely to keep both building materials and trades in short supply for an extended period of time,” Lawless said.

“I think we can expect housing construction costs to rise more significantly over the coming year as supply chains grapple with ongoing shortages.

The Cordell Housing Index Price (CHIP) measures the rate of change of construction costs within the residential market and covers freestanding and semi-detached single and two storey dwelling homes.

Categories which are reflected include preliminaries, brickwork, roofing insulation and roof plumbing, doors and hardware, painting and tiling, electrical services, excavation and concrete work, carpentry and joinery windows and glazing, plastering, plumbing and drainage and sundry appliances.

It should be noted that the index measures movements in the construction component of delivering new homes only and does not incorporate other costs associated with new home delivery such as land, taxes/charges or developer margins.