ABS data released this week shows new dwelling costs rose 5.7% over the past year, even as headline inflation eased to 3.5% in July.
Master Builders Australia says the figures reflect sustained pressure on building businesses from rising costs and policy settings it argues are undermining housing supply.
“The ABS’s observation that higher labour and material costs are being passed on to consumers should serve as a reminder to government that when pressure is placed on builders and tradies, all Australians ultimately pay the price," said Master Builders chief economist, Shane Garrett.
“The rental inflation result is also no surprise, particularly given independent modelling shows that following the federal budget’s tax changes the national rent bill could increase by $3.42 billion over the next four years, making it even harder for renters to save for a deposit."
Master Builders Australia CEO Denita Wawn said recent policy decisions affecting investment are contributing to many new building projects no longer stacking up financially.
“The uncertainty created by global economic disruption and recent Federal Budget measures is hurting housing supply, pushing up rents, and undermining apprenticeships and productivity across the construction sector," Wawn said.
Wawn said post-pandemic figures show a significant increase in cost.
“The cost of building a home is now more than 50 per cent higher than it was before the pandemic, at a time when housing remains one of the biggest contributors to inflation and one of the top concerns for voters," Wawn said.
“A combination of rising costs for new dwellings, alongside market uncertainty, means that project decisions will be delayed and new housing supply will slow.
“As we have consistently argued, the Government should reconsider its proposed changes to capital gains tax, negative gearing, and the ban on self-managed super fund investment in housing.
"At a minimum, it should grandfather the proposed tax changes to trusts including those used by small business builders.
"These would be important steps towards restoring a pro-housing supply, infrastructure and construction agenda ahead of MYEFO."
