Sydney is still the most expensive city to build homes though Brisbane is fast catching up, a new report shows.
The International Construction Market Survey (ICMS) 2024 report* shows an imbalance of labour supply and demand across the region, a shortage of housing supply, and elevated construction costs are the biggest challenges facing the sector.
Sydney holds steady as Australia’s most expensive city to build in ($4,476 per square metre), but Brisbane has moved into second place due to growing market activity and rising labour costs ($4,157).
The report also highlights that Queensland’s construction market is facing immense pressures, which are expected to intensify in the years ahead as major projects for the Brisbane 2032 Olympic and Paralympic Games get underway.
According to Turner & Townsend Head of Real Estate ANZ Julian Kerwood, the Australian construction market has performed better-than-expected over the past 12 months.
“Addressing the near-term challenges for the construction sector will require prompt action to increase housing supply across the regions to enable the construction workforce to migrate to where the demand is”, Kerwood said.
“The long-term success of the construction sector will require collaborative efforts to identify future sectors of growth and focus on targeted training programs to upskill the local workforce or attracting international skills to the region.
“Cost escalation continues to remain high across Australian markets, driven by labour supply shortages and construction union wage increases.
“However, the stabilisation in building material costs has meant that average cost escalation for the region is forecast to be around 3.7 percent in 2024, which is 1.9 percent lower than last year.”
Kerwood believes, nevertheless, that the work being done by governments to address key areas such as housing supply and clean energy production and transmission is shaping a much stronger outlook for the sector.
“These policies should attract support from the private sector and open the door for new opportunities for growth in the years ahead”, he concluded.
*commissioned for global professional services company Turner & Townsend
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