Altus has released its Australian Construction Material Price Outlook report, finding that materials and commodities prices in some categories have fallen or flatlined.
According to the new report, which combines Altus market intelligence with data sources, including those from the Australian Bureau of Statistics and the Australian Institute of Quantity Surveyors, while new dwelling prices escalated, the rate of growth slowed as interest rates climbed, demand fell, and material costs eased. Building construction costs also increased due to labour shortages, while automotive fuel prices saw a slight decline.
Niall McSweeney, President of Cost and Project Management, Asia Pacific at Altus Group, said, “Costs have stabilised for many key commodities and materials in the construction industry, but rapidly rising labour expenses are counterbalancing any savings. Furthermore, general market uncertainty has moved from prices to future projects.”
“We expect a rocky ride for the remainder of 2023 before Australia’s construction sector recovers in 2024. This recovery, however, is dependent on governments guaranteeing their project pipelines and prioritising planning reforms. With interest rates at a decade high, time is now a significant cost centre for any developer. Fast-tracked approvals are likely to stimulate the market and deliver housing needed to support a growing economy and drive down rents.”
The report further details prices movements as follows:
- Structural steel and rebar: Prices have stabilised, driven by a decline in global construction activity
- Concrete: While the cost of aggregate materials, such as sand and gravel, has eased off, the quest for low-carbon products, combined with the high cost of fuel in transportation, has driven price hikes
- Structural timber: Supply has rebounded and a slight decrease over the quarter follows a modest increase over the year
- Plasterboard: Covid-induced supply constraints have been resolved, and high demand has eased as housing stimulus projects conclude
- Bricks: Robust price increases over both the quarter and the year reflect the small pool of suppliers in Australia and the trend back to bricks as a solution to a range of quality and technical challenges
- Copper: With steady price increases over both the quarter and the year, projects with significant copper components in electrical and plumbing works – notably large rail projects – can expect budget implications
- Diesel: the declining price of diesel is alleviating pricing pressures on other materials that rely on fuel for production and delivery, particularly civil projects involving heavy machinery.
McSweeney concluded, “In a constantly changing market, one factor is consistent: the need for accurate and independent cost advice.” The full report is available here.