Australian Property News

Construction costs rise

Posted on Friday, August 27 2010 at 10:43 AM

The cost of constructing a house in Queensland jumped during the June quarter mainly due to the introduction of six-star energy requirements for new homes, according to the Master Builders State of the State housing industry report.

Master Builders' director of housing policy Paul Bidwell says the cost of building a new house in southeast Queensland rose by 2.7 per cent during the quarter.

Seventy per cent of the cost increase can be attributed to the one-off impact of six-star energy requirements, he says, rather than significant increases in labour and/or material costs.

"The move to six-star requirements requires the use of additional insulation and other building materials, which adds to the cost of building a new home," says Bidwell.

"If you exclude the impact of this change, however, construction costs rose by just 0.83 per cent which is slightly above the general rate of inflation."

It was a similar story across the state with most regions reporting modest growth in construction costs, with materials contributing around 50 per cent of the cost and labour around 30 per cent.

Despite the increasing cost of construction, median house prices fell during the June quarter, which was attributed to interest rate rises and tighter lending criteria.