Renewed momentum signals a settling construction sector

National construction costs continued to stabilise through the September quarter, as the sector settles into a steadier environment.

‍Cotality’s latest Cordell Construction Cost Index (CCCI) recorded a 1.0% increase in construction costs nationally over the quarter, a significant acceleration over the past two quarters from the subdued 0.2% increase recorded at the beginning of 2026.

On an annual basis, construction costs increased by 3.2% over the 12 months to September 2026, up from the previous quarter’s annual increase of 2.8%.

Cotality’s Cordell Costings Estimation Manager, John Bennett said the September quarter results suggest a clear resurgence in construction cost momentum, signalling the sector has returned to a more typical price escalation cycle.

“The subdued conditions at the beginning of the 2026 were an anomaly and that expectations of sustained cost easing may have been short-lived.”“The return to quarterly growth of 1.0% brings cost escalation back into line with the levels recorded in late 2024 and 2025, highlighting the continued resilience of underlying construction cost pressures across the country,” he said.

However, Mr Bennett noted the rate of escalation remains at historically subdued levels and below the rates commonly experienced throughout the post-pandemic period.

‍WA records strongest quarterly rise
Western Australia continues to lead the nation in construction cost growth, recording a 1.1% uptick for the September quarter.

Despite WA's pace, the broader national trend remains one of moderation. Victoria and South Australia recorded the lowest growth nationwide at 0.9%, even after strengthening slightly, while New South Wales and Queensland matched the national benchmark at 1.0%.

Over the longer term, Mr Bennett noted that all states continue 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 noted that while suppliers are 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.

“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,” he said.

Uncertainty remains for construction outlook
Looking ahead, Mr Bennett warned that broader ripple effects will continue to cloud the construction sector's outlook for the remainder of 2026.

“There is continued uncertainty in the construction sector. 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.”

“In summary, the September quarter results confirm a renewed acceleration in construction cost growth, although the rate of escalation remains well below long-term historical averages.”