- Cordell Housing Index Price rose by 1% over the December 2020 quarter
- Final index shows annual costs are up 3.6 for 2020
- ABS data shows approved dwelling were up
The Cordell Housing Index Price (CHIP) is a national index employed by CoreLogic that measures the rate of change of construction costs for residential properties.
The Index covers freestanding, semi-detached single and two-storey dwellings.
During the three months to December, it rose by 1%, higher than the September quarter which saw a smaller increase of 0.6%.
Overall, the final index shows residential constructions costs were 3.6% higher annually.
By comparison, the consumer price index increased by 1.6% for the September 2020 quarter, with the previous quarter seeing a -1.9% decrease mainly fuelled by free child care and lower automotive petrol costs.
According to the Australian Bureau of Statistics, the number of dwellings approved rose by 2.6% in November, while the construction industry saw a 2% increase in their employment during the same period.
CoreLogic’s Executive Director of Research, Tim Lawless, said the CHIP index’s increased as expected due to momentum within the new residential house building sector – especially as a result of HomeBuilder.
“With dwelling approvals for houses at record highs, it’s likely we will see additional pressure growing on constructions costs as demand continues to build for residential construction materials and resources,” he said.
“The lift in residential construction costs is likely to flow through to higher prices for built residential products and also place upwards pressure on inflation where housing costs receive the heaviest weighting within the CPI ‘basket’ of goods.”
Mr Lawless concluded by remarking that even after HoemBuilder ends next month, there will still an upward trend in residential construction.
“Although HomeBuilder is phasing out after March, it’s highly likely we will see a continuation in this trend towards higher residential construction costs. It will take some time for builders to work through the pipeline of house approvals that have surged through the second half of last year.”
