The second quarter of 2024 has seen a slowing in the rate of rise of construction costs, compared to the previous couple of quarters of late 2023 and early 2024. There continues to be a softening of building approvals for both residential and non-residential sectors to levels previously seen in 2019.

With interest rates remaining high and inflation falling slower than expected, the current monetary policy appears to be fuelling the continued decline in private domestic dwelling approvals. While demand for housing remains high, until the monetary policy setting changes, the supply issue will need to be addressed by Governments at all levels rather than the private sector. The premium residential market is the exception as it isn’t impacted by same level of funding concerns.

The continued growth in population across most regions of Queensland remains the largest single driver in demand for construction related products. This growth is affecting a wide array of sectors including accommodation, commercial, retail, education, health and community services. While a decline in tender activity has been observed in the past quarter, activity levels continue to remain strong although there are signs that capacity is becoming available within the current market, both in terms of skilled labour and head contractors’ availability and is expected to continue through to the end of 2024.

Labour increases are likely to be the major driver in cost escalation through the second half of 2024 as new wage agreements come into effect. This coupled with low unemployment and strong demand for skilled labour, construction costs are forecast to continue to increase.

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Detailed data for each Australian state can be found in the 2024 Handbook & Cost Guide.