Residential construction costs are rising at the slowest pace in over 20 years, providing a more stable environment for property investment, according to CoreLogic's Cordell Construction Cost Index (CCCI).
The Q2 2024 CCCI recorded just a 0.5% increase, down from 0.8% in Q1, marking a modest 2.6% annual rise, the smallest since March 2002.
While construction prices remain elevated, the slowdown in cost growth, along with higher established housing prices, is expected to improve builder profit margins and provide greater confidence in pricing for new builds and renovations.
On a state-by-state basis, the increase in construction costs ranged from 0.3% in Queensland to 0.6% in NSW and Victoria, with reduced pricing volatility among key materials like timber and metal contributing to the overall slowdown.
This trend indicates a stabilization in the market, making it a potentially favorable time for property investors to consider new projects.
Given the easing in the growth of construction costs, it may now be more cost-effective to build a new home than to invest in the established market, where prices have been rising steadily.
Despite construction costs rising more slowly than inflation, with national CPI up 1.0% in the March quarter compared to a 0.8% rise in construction costs, the easing of residential construction cost growth is a positive sign for reducing inflationary pressures.
Building approval figures saw a 5.5% increase in May, suggesting a potential recovery in construction activity, although the overall market remains tentative.
For property investors, this combination of factors points to a more predictable cost environment and potential opportunities to capitalise on stabilising construction costs and improving profit margins.
With new builds becoming potentially more cost-effective than purchasing existing properties, now could be an ideal time to invest in a new home.
For tailored advice and to explore the best investment opportunities, contact Oli today. With our expert knowledge and insights, Oli can guide you through the complexities of the current market and help you make informed decisions that maximize your investment returns.
Don't miss out on the potential benefits of property investing —reach out to Oli for a secure your financial future today.
Source: Corelogic
This marketing material and its contents is provided for general information purposes only. No part of this marketing material constitutes any advice (financial, tax or otherwise), recommendation or representation to you as to any decision which you should make. You should not use any part of this marketing material to form the basis of any investment decision made by you. Before making any investment decision, you should take independent advice from a professional adviser which takes into account your individual needs and circumstances. All information, opinions and estimates contained in this marketing material are subject to change without notice. We disclaim to the greatest extent possible all liability whatsoever for any loss howsoever arising directly or indirectly from this marketing material or its contents.
Commentaires