Knock on Wood - Construction Costs Stabilise!

Cost escalations, supply chain issues and labour issues are improving in the construction sector.

Contrary to media coverage, when asked whether construction costs have continued to escalate over the past 6 months, two of KEY2's biggest building companies have stated that their costs have actually remained the same and, in some instances, have become slightly lower.

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The construction materials shortage is easing with product availability improving in most categories and this in turn is having a direct effect on construction costs, bringing with it a well needed boost for new build projects. The high levels of inflation on products exacerbated by the Ukraine conflict have also stabilised.

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Moreover, both build companies have made specific mention of their Sub-contractors having come to the party in terms of availability and pricing out of respect for the relationship with the construction industry, which is having a positive effect across the board.

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Also worth mentioning, are the cut rate deals currently on offer for new build buyers from both ANZ (2.76% p.a. discount off the ANZ Home Loan floating rate for 2 years) and SBS Bank (4.15% p.a. fixed for one year and a highly competitive floating rate which is currently discounted to 3.24% p.a. whilst building.)

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These factors, along with positive signs towards interest rate and LVR improvements, speak to the opinion that we've always had, that the market is close to the bottom - probably even by September.

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