The Cordell Construction Cost Index (CCCI) rose 0.5% through the September 2023 quarter. The trend in the CCCI sugests growth in construction costs have now normalised.
As per the chart above from Cordells/CoreLogic, despite the fact that the cost of construction has now stabilised somewhat (albeit still high), it remains a significant challenge to get a new project out of the ground. This is expected to be a hurdle that developers face for longer, especially in Brisbane, as new infrastructure projects in Queensland create ongoing competition for skilled labour.
Construction costs have a significant ability to affect the ultimate feasibility of a project, being the single largest item of expenditure in most residential developments. Increased construction costs, combined with a higher cost of funding and no real backward movement in site values, has ensured that only a very limited number of residential apartment projects remain viable under these current conditions.