CORDELL BUILDING INDICES

Cordell
Construction
Cost Index
(CCCI)
Australia | Quarter 4, 2023

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Contents

Introduction to the Cordell Building Indices 3

National 5

New South Wales 6

Victoria 7
Queensland
8
Western Australia
9
South Australia
10
Disclaimers
11

Australia
Quarter 1, 2023

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Introduction to Cordell
Building Indices
The Cordell Building Indices (CBI) are a series of construction industry index figures that are
used to monitor the movement in costs associated with building work within particular
segments of the industry.

The CBI indicate the rate of change in prices within particular segments of the Australian
construction industry. The changes in prices are measured daily through the use of detailed
cost surveys, and are reported on a quarterly basis. This ensures the most current and
comprehensive industry information available.

Each index is based on a combination of labour, material, plant hire and subcontract services
required to construct buildings within the particular segment being measured. The CBI
measure the change in the cost of constructing buildings, and as such do not provide the
actual costs.

Key components
The indices are based on a comprehensive collection of labour, material, plant hire and
subcontract costs covering all major trade categories within the segment being measured.

Each of the trade categories contains labour, material and plant hire costs combined in typical
proportions required to construct the various types of buildings commonly found within each
segment.

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6 ways big data can help you
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National
0.8% 2.9%
QUARTERLY GROWTH ANNUAL GROWTH

The Cordell Construction Cost Index (CCCI) saw an was the smallest annual rise in the national CCCI
acceleration in the quarterly pace of growth, with since the year to March 2007 (2.7%) and below the
national construction costs rising 0.8% over the pre-COVID decade average (4.0%). This suggests
three months to December. This increase marks a that growth in construction costs have normalised
reversal of the easing trend seen over the previous after recording a recent peak of 11.9% over the 12
four quarters when the quarterly CCCI reading went months to December 2022, albeit at a higher level.
from 4.7% over the September 2022 quarter to 0.5% Although 26.6% higher than at the onset of the
over the three months to September 2023. Although pandemic, the recent surge in CCCI is below the
the pace of increase in the index has risen, the increases seen across national dwelling values, with
latest growth rate remains 20 basis points below the CoreLogic's Home Value Index rising 31.3% over the
pre-COVID decade average of 1.0%, suggesting that same period (36.5% for houses and 15.7% for units).
re-acceleration is more a return to trend rather
The outlook for construction costs over the coming
than a new surge in construction costs.
year is uncertain. While it's unlikely we'll see any
According to the Cordell costings team, pricing declines in construction costs, the pace of growth
remains generally unsettled, with no clear trend could be influenced by several factors. Although
seen across most product types. Depending on the dwelling approvals have risen from a recent low of
supplier, both increases and decreases were 12,185 in January, the latest data from the ABS
recorded in timber and metal prices, although we showed that dwelling approvals remained -15.8%
have seen rises in the price of hardware and below the decade average in November at around
chemical items. 14,500. Although a number of projects are still
moving through the construction pipeline, the
Price rises were also varied across the states, with
recent lull in approvals could result in a shortfall in
an increased growth rate seen in NSW, VIC and WA,
new projects, which would help keep growth in
while SA and QLD both saw a reduction in quarterly
building costs low, due to greater capacity in the
CCCI growth. This quarter's relatively flat result in
construction sector. However, with the CPI
QLD has helped bring QLD growth rates back in line
continuing to ease, it's looking increasingly like we'll
with the other states after recording a stronger
see a cash rate cut in the second half of 2024, which
increase over the past two years.
could fuel housing demand for both established
While up over the quarter, the annual change in and new dwellings. Regardless, the normalisation in
residential construction costs continued to ease as CCCI growth will help provide some certainly for
larger quarterly increases fell out of the annual builders, insurance companies and homeowners
calculation. At 2.9%, the latest 12-month increase alike.

Quarterly change in construction costs v CPI, National

National CCCI National CPI

5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
-1.0%
-2.0%
-3.0%
Sep-19

Jun-20

Sep-23
Sep-22
Jun-18
Sep-18

Sep-20
Jun-19

Sep-21

Jun-23
Dec-17

Dec-19

Dec-20

Jun-22
Dec-18

Jun-21

Dec-23
Dec-22
Mar-19

Dec-21
Mar-18

Mar-20

Mar-22
Mar-21

Mar-23

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New South Wales

Across NSW, the CCCI rose 1.0% over the December quarter, up 40 basis

1.0% QUARTERY points from the 0.6% rise seen over the September quarter. Although up
GROWTH quarter-on-quarter, the latest result is only 10 basis points above the pre-
COVID decade average of 0.9%, suggesting the uptick is more of a
normalisation in growth patterns instead of the start of a new growth cycle.

3.1%
This is supported by the annual result, which eased to 3.1%, the state's
ANNUAL
lowest annual change since the 12 months to March 2021 (2.9%).
GROWTH
Similar to the national trend, NSW dwelling approvals remain sluggish.
Monthly new dwelling approvals remained -26.6% below the decade
average at the end of November, which should help add downward
pressure on construction cost increases as the flow of approved projects
commencing slows down.

While growth in construction costs have seen a mild uptick over the
quarter, growing affordability pressures, low consumer sentiment and
looser supply levels saw the pace of growth across NSW dwelling values
continue to ease, from 2.2% over the September quarter to 0.9% over the
three months to December. This saw NSW's median dwelling value come in
just shy of $950,000 at the end of 2023, with a median house value of
$1,034,204 and a median unit value of $783,488.

Quarterly change in construction costs v CPI, New South Wales

NSW CCCI NSW CPI

5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
-1.0%
-2.0%
-3.0%
Sep-18

Sep-20

Sep-23
Sep-17

Sep-19
Jun-18

Jun-20

Jun-22
Sep-22

Jun-23
Dec-18

Jun-19

Jun-21
Sep-21
Dec-17

Dec-19

Dec-20

Dec-22
Dec-21

Dec-23
Mar-20
Mar-19

Mar-23
Mar-18

Mar-22
Mar-21

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Victoria

Victoria recorded the largest quarterly increase in construction costs

1.1% QUARTERY
GROWTH
among the states, with the CCCI rising 1.1% over the December quarter. This
rise came after a relatively mild increase over the three months to
September (0.3%), making it the fastest acceleration in construction cost
increases among the states.

2.9% ANNUAL
GROWTH
Despite the quarterly rise, the annual increase in the Victorian CCCI
continued to ease to 2.9% over the 2023 calendar year. This is down from a
recent high of 13.0% over 2022 and is Victoria's lowest annual change since
the 2016 calendar year (2.6%).

The quarterly uptick in construction costs comes as the change in Victorian

dwelling values shifts into negative territory, falling -0.1% over the December
quarter, driven by a -0.2% decline in Melbourne dwelling values. As of
December 2022, Melbourne's median dwelling value came in at $780,457,
while regional Victoria's median was a more affordable $564,983.

After tracking below average through much of 2023, Victoria’s new dwelling
approvals normalised in November. While most other states’ monthly count
of new dwelling approvals was well below the decade average, Victoria's
count came in just -0.2% below average at 5,341.

Quarterly change in construction costs v CPI, Victoria

VIC CCCI VIC CPI

6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
-1.0%
-2.0%
-3.0%
Sep-18

Sep-20

Sep-23
Sep-17

Sep-19

Sep-22
Jun-18

Jun-20

Jun-22

Jun-23
Dec-18

Jun-19

Jun-21

Sep-21
Dec-17

Dec-19

Dec-20

Dec-22

Dec-23
Dec-21

Mar-23
Mar-19
Mar-18

Mar-20

Mar-22
Mar-21

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Queensland

0.1%
Queensland recorded the lowest quarterly rise in construction costs among
QUARTERY the states, with the CCCI rising just 0.1% over the December quarter. This
GROWTH relatively flat result is down from the 0.8% rise seen over the three months
to September and is the state's lowest quarterly result since the March 2001
quarter when values fell -0.1%.

2.8% ANNUAL
GROWTH
The December quarter's weaker growth helped bring QLD's annual growth
rate back in line with the other states at 2.8%, 10 basis points below the
national rate (2.9%). QLD had previously recorded the highest annual
growth rate among the states over the 12 months to September (4.8%) and
has seen the highest cumulative change since COVID (28.6%).

The CoreLogic home value index saw Queensland dwelling values increase
by 3.0% over the final quarter of 2023, with Brisbane and Regional
Queensland values up 3.7% and 2.3%, respectively. As of December 2023,
QLD's median house value came in at $768,502, while the median value of a
unit was $578,207. Monthly dwelling approvals across Queensland
remained -20.0% below the decade average at the end of November.
However, the temporary boost to the First Home Owners grant introduced in
mid-November could help boost approvals over the coming months.

Quarterly change in construction costs v CPI, Queensland

QLD CCCI QLD CPI

6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
-1.0%
-2.0%
-3.0%
Sep-18

Sep-20
Sep-19

Sep-23
Jun-18

Jun-20

Jun-22

Sep-22

Jun-23
Dec-18

Jun-19

Jun-21

Sep-21
Dec-17

Dec-19

Dec-20

Dec-23
Dec-22
Mar-19

Dec-21

Mar-23
Mar-18

Mar-20

Mar-22
Mar-21

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Western Australia

Western Australia, the latest CCCI showed construction costs rose 0.7% over

0.7% QUARTERY
GROWTH
the December 2023 quarter, up 50 basis points from the 0.2% rise seen in
the three months to September. While up over the quarter, WA's latest result
remained 10 basis points below the national increase (0.8%) in December
and 20 basis points below the average quarterly rise seen across WA in the

2.3%
decade to COVID (0.9%).
ANNUAL
GROWTH Annually, Western Australia's CCCI increased by 2.3%, which was the lowest
annual rate among the states. WA also recorded the lowest cumulative
increase in construction costs since the onset of the pandemic, up 24.5%
compared to a 26.6% rise nationally.
Over the same period, WA has seen established dwelling values rise by
47.3%. While most of the other states are starting to see a slowdown in value
growth, WA still recorded a strong quarterly result (4.9%), thanks to its
relatively affordable median dwelling value ($627,945), low advertised
supply levels and strong economic conditions.
Over the 2023 calendar year, WA recorded an average of 1,150 new dwelling
approvals per month, which is -34.5% below the previous decade's
average.

Quarterly change in construction costs v CPI, Western Australia

WA CCCI WA CPI
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
-1.0%
-2.0%
-3.0%
Sep-18

Sep-20
Sep-19

Sep-23
Jun-18

Jun-20

Jun-22

Sep-22

Jun-23
Dec-18

Jun-19

Jun-21

Sep-21
Dec-17

Dec-19

Dec-20

Dec-23
Dec-22
Dec-21
Mar-19

Mar-23
Mar-18

Mar-20

Mar-22
Mar-21

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South Australia

South Australia saw the CCCI increase by 0.5% over the three months to

0.5% QUARTERY
GROWTH
December 2023, down from the 0.6% increase over the September quarter.
This took the latest quarter’s result 40 basis points below the pre-COVID
decade average (0.9%). It is the lowest quarterly increase since the
September quarter of 2019 (0.5%), before COVID-related material constraints

2.8%
and HomeBuilder demand saw residential construction costs surge.
ANNUAL
GROWTH Similar to the quarterly trend, SA's annual change in construction costs
dropped a further 1.3 percentage points over the December quarter to 2.8%
over the 2023 calendar year. This is down from a peak of 10.5% seen over the
2022 calendar year.

The continued easing in SA's CCCI results is somewhat surprising given that
monthly new dwelling approvals across the state have been roughly in line
with the previous decade average over the past year, which should be
adding upwards pressure to construction costs. Although in line with the
decade average, new dwelling approvals are tracking lower than the high
levels seen through 2021 and part of 2022.

While growth in construction costs are easing, SA's housing values is still
recording strong growth, with the HVI rising 3.4% over the quarter and 8.9%
over the year. As of December 2023, SA's median dwelling value was
$648,656.

Quarterly change in construction costs v CPI, South Australia

SA CCCI SA CPI
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
-1.0%
-2.0%
Sep-19

Sep-23
Jun-18

Sep-18

Jun-20

Sep-20

Sep-22
Jun-19

Sep-21

Jun-23
Dec-17

Dec-19

Jun-22

Dec-23
Dec-18

Jun-21
Dec-20

Dec-22
Dec-21
Mar-19
Mar-18

Mar-20

Mar-22
Mar-21

Mar-23

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