In 2023 Sydney is the most expensive market in Australia to build in. Image: Canva
  • Building prices in Perth were the most expensive in Australia in 2022
  • Sydney has now surpassed Perth as the most expensive market to build
  • Six US cities rank in the top 10 most expensive places to build

Sydney is the most expensive city to build in across Australia, according to a new report from professional services consultancy Turner & Townsend.

Australia and New Zealand Real Estate Lead at Turner & Townsend, Matt Billingham, says Sydney has historically been the most expensive place in Australia to build, but in 2022, Perth exceeded Sydney prices.

“Costs were amplified during this time due to a large increase in construction projects, which placed over-demand on the smaller construction market,” he said.

“Sydney has now returned to the top position as the most expensive market to build in Australia in 2023.”

 

Ranking

(/89 markets)

Cost per m2 (US$) 2022 inflation

(%)

2023 inflation

(%)

Labour / hour

(US$)

Sydney 34 2,950 7.5 4.0

65.3

Perth

48 2,633 8.0 3.0 57.9
Brisbane 51 2,561 9.0 5.0

66.7

Melbourne

52 2,540 6.5 4.0 64.3
Adelaide 53 2,382 5.5 4.0

60.6

Source: Turner & Townsend.

But as labour prices increase due to a skills shortage crisis, and the Queensland Government continues their infrastructure investment in preparation for the 2032 Olympics, Brisbane’s construction wages have overtaken Sydney and Melbourne, with an average of A$97.76 per hour (US$66.7).

“Brisbane’s market is impacted as a direct result of major investment in public infrastructure projects across health, transport and in preparation for the Olympic Games,” he said.

“It will be some time before high labour costs dissipate and the return of immigration eases shortages.

“With the housing slowdown, labour is shifting to major infrastructure and renewable projects as well as developments that are being planned for the Olympics in 2032.”

Construction market expected to cool

Billingham said there is a stabilisation of some building material costs with the easing of supply chain disruptions, however some uncertainty remains around the softening across the domestic economy.

“We expect to see some cooling across sectors that are consumer driven, as households grapple with high cost of living pressures and higher interest rates,” he said.

The slowdown in private sector spending in construction is likely to be a global trend, with a combination of high inflation, labour shortages and rising interest rates curbing expenditures.

“On the other hand, public sector spending remains robust and there is a significant pipeline of major projects to be delivered around the country, which will keep markets buoyed,” Billingham said.

Most expensive cities in the world to build in

The Turner and Townsend survey also found that the United States of America is high on the rankings of the most expensive places to build, with six American cities in the top 10.

New York is the most expensive market, with an average build cost of A$8118 (US$5,451) per square metre, and San Francisco follows closely behind on A$7,744 (US$5,200) per square metre.

Switzerland and Japan are still the priciest countries in which to build, with Geneva and Zurich falling third and fourth respectively and Tokyo and Osaka coming in at fifth and sixth.

For the first time, Hong Kong and London have dropped out of the top 10 ranking, having been overtaken by the US.

City Price per square metre
Geneva 4,662
Zurich 4,653
Tokyo 4,576
Osaka 4,497
Hong Kong 4,292
London 3,879

Source: Turner and Townsend



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