Australia’s construction cost roller coaster is finally showing signs of stabilising.
Cotality’s Cordell Construction Cost Index recorded a one-percent increase in construction costs nationally over the September 2026 quarter.
The return to quarterly growth of one percent brings cost escalation back into line with the levels recorded in late 2024 and 2025, Cotality’s Cordell Costings Estimation Manager John Bennett said.
Mr Bennett noted the rate of escalation remains at historically subdued levels, and below the rates commonly experienced during the post-pandemic period.
On an annual basis, construction costs increased by 3.2 percent over the 12 months to September 2026.
Cotality’s Cordell Costings Estimation Manager John Bennett said the September quarter results suggest the sector has returned to a more typical price escalation cycle.
“The (highly) subdued conditions at the beginning of the 2026 were an anomaly, and expectations of sustained cost easing may have been short-lived,” Mr Bennett said.
“The September 2026 quarter results highlight the continued resilience of underlying construction cost pressures across the country.”
Western Australia recorded the nation’s strongest quarterly rise, recording a 1.1 percent uptick for the September quarter.
Victoria and South Australia recorded the lowest growth nationwide at 0.9 percent, even after strengthening slightly, while New South Wales and Queensland matched the national benchmark at one percent.
In the long-term, Mr Bennett said all states continued to track below their five-year averages, with Queensland and Victoria performing slightly better relative to national figures.
Plastics surge amid unsettled market
Price movement across trades and building materials remained varied in the September quarter, led by across-the-board increases in plastics, alongside minor uplifts in plasterboard.
Mr Bennett said while suppliers were returning to standard pricing cycles, the broader market remains unsettled.
“Suppliers appear to be returning to standard pricing cycles, though ongoing adjustments continue across the sector,” Mr Bennett said.
“Additionally, some costs associated with the Middle East conflict may also now be flowing through to the overall material prices.
“These current developments are expected to place continued pressure on the already tight builders’ margins and overhead costs.”
Uncertainty remains for construction outlook
Mr Bennett warned that broader ripple effects would continue to cloud the construction sector’s outlook for the remainder of 2026.
“While underlying cost pressures remain evident, the timing and magnitude of future increases will largely depend on how domestic and global market conditions evolve, making this a key area for ongoing review,” Mr Bennett said.
“The September quarter results confirm a renewed acceleration in construction cost growth, although the rate of escalation remains well below long-term historical averages.”
