Increased Costs of Materials in the Residential Market

The Producer Price Index which was released by the Australian Bureau of Statistics indicates that the cost of materials used for residential construction has continued to increase.

The strong demand for timber, plaster and glass has reflected the recent surge in home building across Australia.

Over the March 2015 quarter, the cost of these home building materials increased by 0.8%, with an overall gain of 3.3% compared to the same quarter in 2014. It also appears that the local steel industry has been affected by the ready supply of steel from China and South East Asia and the weaker Australian dollar.

Since there still remains a strong demand for the construction of new housing in NSW, it is likely that such price rises will continue.

Given this forecast – further increases of material prices should be expected.

This current focus on residential projects also continues to maintain pressure on the manufacturers and suppliers of these materials which will likely mean longer lead times will be experienced in sourcing and acquiring the necessary materials.