Jun 16 2022 | Investment
The Rising Cost Of Construction – A Chief Economist’s Analysis
Looking back only a few years ago, we spoke of Australian builders and developers taking advantage of high-quality, low-cost materials imported from China. Yet as we fast forward through the devastation of bushfires, a pandemic, and recent flooding, we find the construction industry facing increases in costs not seen since 2005.
This month, White & Partners refer to Ray White Group Chief Economist, Nerida Conisbee to observe the myriad of factors setting challenges across the building sector.
Managing construction risk will remain a critical aspect of property investment given these factors. Long-standing Builder-developers have the opportunity to significantly outperform. Increased oversight and risk mitigation from financiers will only increase pressure on the sector.
We will also need to keep a close eye on the future and consider whether these increases in prices will stay with us, and if so, will they be absorbed by discounting land values, or passed through via higher rents and end prices.
