The Urban Developer
AdvertiseEventsWebinars
Urbanity
Awards
Sign In
Membership
Latest
Menu
Location
Sector
Category
Content
Type
Newsletters
Untitled design (8)
FULL PROGRAM RELEASED FOR URBANITY-25 CONNECTING PROPERTY LEADERS ACROSS THE ASIA PACIFIC
FULL PROGRAM RELEASED FOR URBANITY-25 WHERE THE PROPERTY INDUSTRY CONNECTS
VIEW FULL AGENDADETAILS
TheUrbanDeveloper
Follow
About
About Us
Membership
Awards
Events
Webinars
Listings
Resources
Terms & Conditions
Commenting Policy
Privacy Policy
Republishing Guidelines
Editorial Charter
Complaints Handling Policy
Contact
General Enquiries
Advertise
Contribution Enquiry
Project Submission
Membership Enquiry
Newsletter
Stay up to date and with the latest news, projects, deals and features.
Subscribe
ADVERTISEMENT
SHARE
print
Print
ConstructionClare BurnettTue 10 Sep 24

Cost Increases Continue, But End in Sight: Altus

Construction cost EDM

Material costs will continue to increase but escalations will calm by 2026, according to the construction cost latest report from Altus Group.

The small, but welcome ease in construction cost escalation rates would happen as inflation began to soften from 2025, it said. 

Brisbane and Perth are expected to benefit most from this escalation easing, with Perth maintaining a 5.5 per cent increase in 2025, before dipping to 5 per cent in 2026, Altus predicted. 

Costs in Brisbane, which has been experiencing the biggest escalations of any state capital with a 7.5 per cent increase this year, would decline slightly to 7.25 per cent in 2025, with a steeper drop to 6.5 per cent in 2026, albiet from an elevated base.

Sydney and Melbourne would experience escalation declines to 4.75 per cent and 4.5 per cent respectively, before rising again in 2026 to 5 and 4.75 per cent. 

Altus Group’s construction cost outlook

null
▲ Source: Altus Group Q2 2024 Construction Material Price Outlook

As Chinese demand for iron ore and manufactured steel decreased, a welcome decline in steel prices would positively impact costs, especially in industrial and infrastructure projects, given that global steel trading prices had fallen to their lowest levels since 2016, Altus said.

Structural timber prices were falling due to “sluggish market demand,” a downward trend that Altus predicted would continue. 

While native logging was banned in Western Australia and Victoria in 2024, and Queensland is following suit in state-owned forests from January, this would lead to hardwood being replaced with more expensive composite wood alternatives.

In other areas, however, prices were set to increase further, with concrete rising 4.71 per cent in the year to date, plasterboard up 7.47 per cent and brick prices rising 8.7 per cent.

Input prices for housing construction, including land, materials, fees, permits, professional services and equipment, and the expenses associated with hiring construction workers increased by 0.4 per cent, a “softening” and a return to pre-pandemic levels, Altus said.

Altus materials escalation index

null
▲ Source: Altus Group Q2 2024 Construction Material Price Outlook

“Decreased demand for new construction has led to suppliers discounting products used in the initial stages of construction, like structural timber,” according to the quantity surveyor. 

“These discounts have partially offset price increases in other areas.” 

This included a 1.1 per cent input price rise for house construction, it said, with a “stark divide” in prices between regional and city projects emerging. 

Output prices—those charged by the construction companies and contractors—continued to rise. 

Over the past 12 months these construction costs had risen 6.3 per cent, after the most recent quarterly 1.3 per cent rise.

“Despite material input prices remaining flat, the overall growth in construction costs is primarily driven by ongoing labour shortages for skilled tradespeople, with high demand continuing to push output costs upward,” Altus said. 

Construction wages increased by 0.8 per cent for the quarter and 3.9 per cent over the year.

HotelResidentialOtherRetailEducationIndustrialStudent HousingSelf StorageRetirement & Aged CareOfficeInfrastructureHealthcareDisability HousingData CentresChildcareBuild-to-RentAffordable & Social HousingAustraliaSector
AUTHOR
Clare Burnett
More articles by this author
ADVERTISEMENT
TOP STORIES
Exclusive

Accor Deputy Delivers Verdict on Brisbane Games Hotel Shortfall

Phil Bartsch
6 Min
Qld Budget 2025-26 Brisbane City
Exclusive

Billions Promised, Now Deliver: Industry’s Qld Budget Verdict

Vanessa Croll
6 Min
Medium Density housing in NSW
Exclusive

NSW Budget ‘Groundbreaking’ $1bn Guarantee to Unlock Housing

Leon Della Bosca
7 Min
Exclusive

Azure’s Trent Keirnan on Playing the Long Game

Taryn Paris
5 Min
Exclusive

Private Credit Surge, Skittish Buyers Force Banks to Loosen Presale Rules

Taryn Paris
5 Min
View All >
TimePlace Manly shoptop
Construction

Time & Place Plans Second Manly Project as First Begins

Vanessa Croll
Ledlin Developments Somerville Business Park
Industrial

Ledlin Plots $13m Somerville Premium Business Park

Leon Della Bosca
Builder Hansen Yuncken has completed construction of ISPT and HESTA's latest addition to the St Vincent's Hospital Melbourne Precinct.
Life Sciences

ISPT, HESTA $140m Fitzroy Life Science Tower Tops Out

Marisa Wikramanayake
Part of the St Vincents’ Hospital Melbourne Precinct, the 10-storey facility will be ISPT’s first direct asset in the se…
LATEST
TimePlace Manly shoptop
Construction

Time & Place Plans Second Manly Project as First Begins

Vanessa Croll
2 Min
Ledlin Developments Somerville Business Park
Industrial

Ledlin Plots $13m Somerville Premium Business Park

Leon Della Bosca
3 Min
Builder Hansen Yuncken has completed construction of ISPT and HESTA's latest addition to the St Vincent's Hospital Melbourne Precinct.
Life Sciences

ISPT, HESTA $140m Fitzroy Life Science Tower Tops Out

Marisa Wikramanayake
2 Min
Not-for-profit BaptistCare is about to embark on one of its biggest projects to date, a 6.4ha development in Sydney’s north west with a capital investment value exceeding $2 billion.
Placemaking

BaptistCare Plans $2bn Precinct at Macquarie Park

Renee McKeown
2 Min
View All >
ADVERTISEMENT
Article originally posted at: https://theurbandeveloper.com/articles/altus-group-construction-costs-2025