Australia Housing Market White Paper 2026: In-Depth Analysis Series | Week 14 — Construction Costs: Inflation Has Eased from Its Peak, but Cost Pressures Remain

Following Week 13’s examination of construction pipeline capacity and delivery timing, Week 14 turns to another structural factor influencing Australia’s housing supply: construction costs. Drawing on Chapter 1 of the Australia Housing Market White Paper 2026, this article examines how construction cost growth has changed over time, why a slowdown in inflation does not necessarily mean that building has become cheaper, and how different material price trajectories continue to shape project costs. The central issue is the distinction between the rate at which construction costs are rising and the level at which those costs remain. Although cost growth has moderated from its 2022 peak, more recent data indicate that construction input-price pressures remain elevated. Elevated input prices continue to influence project feasibility and the economics of new housing supply.