Australian construction cost growth accelerated over the June 2026 quarter, reversing the sharp slowdown recorded earlier in the year and confirming the March quarter lull was an anomaly rather than the start of a sustained downturn.
(Cotality Release) Cotality’s latest Cordell Construction Cost Index (CCCI) recorded a 1.0% increase in construction costs nationally over the quarter, a significant acceleration from the 0.2% rise in the previous March quarter.
On an annual basis, construction costs rose 2.8% over the 12 months to June, up from 2.3% in March. While this demonstrates stronger growth, this increase remains historically subdued, sitting well below the rates experienced throughout much of the post-pandemic period.
Cotality’s Cordell Costings Estimation Manager, John Bennett said the June quarter’s results reinforce the March quarter slowdown was an anomaly, rather than the beginning of a sustained easing cycle.
“The return to a 1.0% quarterly increase brings cost escalation back to levels seen prior to the softer conditions seen at the start of 2026, highlighting the ongoing resilience of underlying construction cost pressures across the country.
“While the current annual result is approaching, but still marginally below, the 2.9% annual growth recorded in the March and June quarters of 2025,” he said.
NSW records strongest quarterly uptick.
Mirroring the national trend, construction costs across the states accelerated sharply, bouncing back from a muted March quarter.
New South Wales recorded the strongest quarterly increase at 1.1%, up from 0.2% in the previous quarter.
While Queensland, South Australia and Western Australia each recorded growth of 1.0%, consistent with the national average. Victoria recorded the lowest rate of escalation nationally at 0.9%, although this still reflects a notable improvement on March quarter results.
However, Mr Bennett said, “Looking at the longer-term trends, all states continue to track below their respective five-year average rates of cost growth.”
Nationally, the five-year cumulative increase now stands at 29.5%, a slight easing from 30.1% recorded in the previous quarter, representing a decline of approximately 60 basis points.
Materials hit with a supplier waiting game
The June quarter saw movement across several material categories, including the early effects of supply-chain disruptions associated with the Middle East conflict.
PVC and PEX pipe products were among the most notable categories impacted, while increases were also observed in the cost of heavy plant, crane hire, and associated machinery.
“Despite considerable media attention surrounding construction inflation and forecasts of rising building material costs, these pressures are not yet being fully reflected in observed material pricing, said Mr Bennett.
“Instead, suppliers appear to be recovering costs through fuel levies, freight charges, logistics fees, and other surcharges, rather than implementing widespread price hikes.
“Right now, it’s a waiting game for suppliers, who are holding back on passing through the full force of cost increases until the global economy stabilises,” he said.
Construction sector outlook for 2026
Mr Bennett said market observations suggest the industry is remaining cautious, as pressure continues to build on project’s margins and overhead costs – a dynamic set to shape the construction landscape and drive ongoing monitoring through the rest of 2026.
“While underlying cost pressures remain evident, the timing and magnitude of future increases will largely depend on how both domestic and global market conditions evolve over the coming quarters,” he said.
“Overall, the June quarter results indicate that construction cost escalation has returned to a more established growth pattern, albeit at rates that remain well below long-term historical averages.”
