This article is from the Australian Property Journal archive
BRISBANE has become Australia’s second most expensive city to build in, amidst continued high demand and the impacts of the ongoing labour shortage.
According to Turner & Townsend’s International Construction Market Survey 2024, Sydney is still the most expensive city to build in at US$3,017 per sqm, followed by Brisbane at US$2,802 per sqm.
This comes after Brisbane overtook Canberra as the second most expensive city in the country, after home values lifted by 1.4% in May.
Nationally, construction costs grew from US$2,613 per sqm in 2023 up to US$2,724 per sqm in 2024.
While the average hourly wage growth was still low over the last 12 months, up from US$64.9 in 2023 to US$65 in 2024.
“Over the past 12 months, the Australian construction market has performed better- than-expected in the face of challenging market conditions, namely critical skilled labour shortages and significantly higher construction costs,” said Julian Kerwood, head of real estate, ANZ at Turner & Townsend.
“Addressing the near-term challenges for the construction sector will require prompt action to increase housing supply across the regions to enable the construction workforce to migrate to where the demand is. The long-term success of the construction sector will require collaborative efforts to identify future sectors of growth and focus on targeted training programs to upskill the local workforce or attracting international skills to the region.”
According to Oxford Economics Australia, construction cost inflation may pick up again, adding a further $200 million in costs to a $1 billion project.
The construction sector is experiencing strong levels of investment from both the federal and state governments in response to Australia’s growing population.
Though globally, Australia remains the third most expensive region for construction labour costs, behind North America and Europe.
“Cost escalation continues to remain high across Australian markets, driven by labour supply shortages and construction union wage increases. However, the stabilisation in building material costs has meant that average cost escalation for the region is forecast to be around 3.7 percent in 2024, which is 1.9 percent lower than last year,” added Kerwood.
“The work being done by governments to address key areas such as housing supply and clean energy production and transmission is shaping a much stronger outlook for the sector. These policies should attract support from the private sector and open the door for new opportunities for growth in the years ahead.”
