Earlier this week, the National Housing Finance and Investment Corporation (NHFIC) reported that the cost of most building materials soared by between 20% and 40% in the year to June, with supply constraints accounting for at least 80% of the cost inflation:
Rampant building cost inflation.
CoreLogic’s latest Cordell Construction Cost Index (CCCI) is out, with national residential construction costs increasing at a record rate in the year to September 2022.
Residential construction costs increased by 11.0% over the 12 months to September, exceeding the 10% annual rise recorded over the 12 months ending June 2022. The quarterly figure of 4.7% was also higher than the previous quarterly figure of 2.4% and above the 3.8% surge recorded over the three months to September 2021 when lockdowns were having a more significant impact on domestic supply chains:
Strongest building cost inflation in history.
CoreLogic’s Construction Cost Estimation Manager, John Bennett, noted that cost inflation is especially high among timber and metal materials, which was affecting framing and reinforcing. There was also strong growth in the cost of wall linings, including plasterboard and fibre cement.
These results are a hammer blow for the building industry, which has already experienced a wave of bankruptcies. Many builders are on fixed price contracts, which means their revenue is locked in while their supply costs surge.
