The Cordell Construction Cost Index (CCCI), which tracks the cost to build a typical new dwelling, recorded a growth rate of 0.8% over the three months to December. This marks a reversal of the easing trend seen over the previous four quarters when the quarterly CCCI reading went from 4.7% in Q3 2022 to 0.5% in Q3 2023. The annual growth rate for the 2023 calendar year was 2.9%.
CoreLogic Economist Kaytlin Ezzy said although the quarterly CCCI reading has risen, the latest growth rate remains 20 basis points below the pre-COVID decade average of 1.0%.
"This suggests that reacceleration is more a return to trend rather than a new surge in construction costs," Ms Ezzy said.
"While up over the quarter, the annual change in residential construction costs continued to ease as larger quarterly increases fell out of the annual calculation."
At 2.9%, the latest 12-month increase was the smallest annual rise in the national CCCI since the year to March 2007 (2.7%) and below the pre-COVID decade average (4.0%).
"This suggests that growth in construction costs have normalised after recording a recent peak of 11.9% over the 12 months to December 2022, albeit at a higher level. Although 26.6% higher than at the onset of the pandemic, the recent surge in CCCI is below the increases seen across national house values, with CoreLogic's Home Value Index rising 36.5% over the same period," Ms Ezzy added.
Source: CoreLogic 2024
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