New figures from the Australian Bureau of Statistics and the Housing Industry Association (HIA) confirm that while material cost inflation is easing, the total cost of building and upgrading residential buildings continues to climb. For strata managers, this has significant implications— not only for new construction but also for capital works funds, maintenance planning, insurance valuations, and compliance with evolving regulations such as the National Construction Code (NCC) 2022.
According to the HIA, the average cost of constructing a new detached house in Australia rose by 4.8% in 2024/25, reaching $492,410, despite material costs rising only 1.6%. This disconnect is largely due to new regulatory burdens, upgraded energy efficiency standards, and increased labour and compliance costs.
Here’s what strata managers across the country should be aware of on a state-by-state basis:
New South Wales (NSW)
In NSW, major upgrades and remedial works are becoming more expensive due to both construction inflation and tightening local planning rules. Strata schemes undertaking facade upgrades or fire compliance rectifications will likely face rising contractor prices, longer approval times, and stricter NCC energy requirements.
Key Risk: Rising compliance costs and extended timelines for common property works.
Victoria
Victorian strata schemes may see moderate cost increases for major refurbishments, particularly due to rising thermal performance requirements under NCC 2022. Labour shortages in urban areas are also contributing to higher contractor quotes. Upgrades to building envelopes and services (e.g., electrical and plumbing) will be more costly.
Key Risk: Increased costs for energy efficiency upgrades and retrofits.
Queensland
While Queensland has seen stable material costs, rising costs for labour and professional services (engineers, certifiers) are impacting capital works. The recent surge in prices for copper piping (+13.9%) and electrical cabling (+8.3%) could push up budgets for common property upgrades, especially in older buildings.
Key Risk: Higher budgets needed for plumbing and electrical system replacements.
Western Australia (WA)
Perth strata schemes benefit from relatively low cost pressure, but remote and regional communities face significant logistics-driven inflation. Increases in concrete and cement-based product prices could affect foundation or pathway works. Skilled trades remain in short supply, leading to delays and higher contractor fees.
Key Risk: Labour shortages and material delivery costs, especially outside Perth.
South Australia
SA strata complexes may face above-average increases for certain material categories such as concrete and fibrous cement (up 5.7% and 7.5%, respectively). These materials are commonly used in external cladding and balcony remediation—highlighting the need for updated sinking fund forecasts.
Key Risk: Underestimation of future repair costs in existing budgets.
Tasmania
In Tasmania, freight and supply chain issues amplify price increases in key materials, particularly copper and electrical items. Strata managers overseeing older buildings should expect rising costs for infrastructure upgrades and factor this into reserve fund forecasts.
Key Risk: Supply constraints impacting project timing and contractor availability.
Australian Capital Territory (ACT)
ACT schemes are facing growing pressures due to high demand for trades and tighter energy efficiency compliance. NCC 2022 has a noticeable impact on projects involving building envelope upgrades, window replacements, and new plant installation.
Key Risk: Energy performance compliance driving up capital works costs.
Northern Territory
Strata schemes in the Northern Territory often rely on a small pool of suppliers and tradespeople. Increases in material input costs are quickly passed on to the end consumer. Managers should monitor capital works fund adequacy carefully and allow for contingencies in all contractor engagements.
Key Risk: High volatility in project costs due to limited local supply chain options.
What This Means for Strata Managers
- Update Capital Works Forecasts: Price movements in key materials like concrete, copper, and fibrous cement suggest that 10-year maintenance forecasts may already be outdated.
- Review Insurance Valuations: The 4.8% increase in new home construction costs implies that reinstatement values should be reassessed more frequently.
- Communicate Early: Budget increases for major works may require proactive communication with committees and owners.
- Plan for Compliance Costs: NCC 2022 changes—especially those tied to thermal performance and energy efficiency—will continue to add cost layers to capital works projects.
While the market has stabilised since the volatility of 2021–22, strata managers should remain vigilant in tracking rising costs and advocating for realistic levies to meet future obligations.