Home builders in Victoria paid more to construct residential properties in 2017 more than their counterparts elsewhere in Australia, according to Cordell House Index Price (CHIP) report.
This likely made it more attractive for property developers to launch projects in other states, such as New South Wales, partly because of competitive pricing for steel metal fabrication in Tamworth and any other city in the region.
The CHIP report showed that the cost of home construction in Victoria increased five per cent in the previous year. It attributed the higher prices to the value of construction materials, employment and cargo, particularly in Melbourne suburbs.
In New South Wales and South Australia, prices rose by 4 per cent and 3.8 per cent, respectively. Queensland home construction costs climbed by 3.4 per cent, while those in Western Australia increased 2.6 per cent. Eliza Owen, a commercial research analyst, said that developers either absorbed these higher costs or passed them on to consumers.
Owen said that the growth of Victoria’s housing market predominantly caused an uptick in building expenses. As the demand for new homes increased, more companies sought to take advantage of it. However, several other developers found it hard to keep up and decided to cancel some projects due to the financial burden.
For instance, home builders in Queensland may have deferred new project launches due to the rapid rise of construction expenses. Whilst the state only registered a 3.4 per cent increase in costs, the CHIP report revealed that it recorded the fastest pace of growth nationwide. Experts based their findings on expenses related to freestanding and semi-detached single and two-floor houses.
Higher construction costs may be a problem, but developers should find it easier to shop around for competitive rates. Contractors such as steel fabricators know that offering the best rates will be key to making the most of a growing demand for new home construction.