Construction costs rose 1% nationally in the September quarter 2026, according to Cotality’s Cordell Construction Cost Index (CCCI). The rise matches the June quarter’s 1% increase, after a subdued 0.2% at the start of the year. Annual growth reached 3.2% in the 12 months to September, up from 2.8% a quarter earlier.
John Bennett (pictured), Cordell costings estimation manager at Cotality, said the result signals a clear resurgence in cost growth and a return to a more typical cycle of price escalation. He suggested hopes of sustained easing may have been short-lived.
Bennett said quarterly growth is now back in line with levels seen in late 2024 and 2025, “highlighting the continued resilience of underlying construction cost pressures across the country”.
Building material prices were mixed, with plastics rising across the board and plasterboard edging up. Bennett said suppliers appear to be returning to normal pricing cycles, although adjustments are continuing across a still-unsettled market.
“Additionally, some costs associated with the Middle East conflict may also now be flowing through to the overall material prices,” he said.
He warned that these developments are likely to keep pressure on builders’ already tight margins and overheads, adding to the cost pressures already testing borrowers’ capacity.
Western Australia recorded the strongest quarterly increase at 1.1%. New South Wales and Queensland matched the national rate of 1.0%. Victoria and South Australia posted the smallest rises at 0.9%, despite both strengthening slightly on the previous quarter.
Over the longer term, Bennett said, every state continues to track below its five-year average.
The cost rebound comes as house building approvals stay strong. Private sector house approvals rose 3.7% to 10,885 in August, the eighth straight month above 10,000, even as total dwelling approvals fell 6.1%, according to the latest Australian Bureau of Statistics (ABS) building approvals data.
Bennett said the timing and size of future cost increases will depend on how domestic and global conditions evolve, making costs a key area to watch.
“There is continued uncertainty in the construction sector,” he said.
Even so, he noted that escalation remains historically subdued. It sits below the rates common through the post-pandemic period and well below long-term averages.
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