The cost of building a new home has increased by forty per cent in the past five years but new figures suggest there's finally some good news for buyers. Construction inflation or cost increases have slowed substantially. The federal government is pointing to the figures as evidence it's winning the fight against inflation.
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00:00Running a construction business is a precarious game, with more building companies going under
00:08than any other sector. In this financial year, more than 1,800 businesses have collapsed,
00:14an average of five a day. Construction costs have increased by 40% over the last five years.
00:21That's largely due to the closed borders and post-COVID supply chain shock that sent labour
00:26and material costs in an already overheated sector soaring. Construction inflation hit
00:32a peak in July 2022, with costs leaping 21.7%. Fresh government figures show that slowed
00:41dramatically, prices now rising by 2.8% in the year to November. Evidence, the Treasurer
00:47says, that efforts to bring down inflation are working.
00:51Australia's made substantial and sustained progress in the fight against inflation and
00:56we expect to see that reflected in the inflation numbers this week.
01:02The ABS will release the fourth quarter figures tomorrow, the last piece of economic data
01:07the Reserve Bank needs to decide whether to cut or keep interest rates on hold next month.
01:13Jim Chalmers reminding the RBA that inflation's back within its own target range.
01:18When we came to office, inflation was north of 6% and rising fast. Now it has a 2 in front of it.
01:24I want to see interest rates come down as quickly as possible, but the Reserve Bank
01:27Governor has sent out multiple messages to the government that when the government's
01:31spending continues to increase, that puts upward pressure on inflation and therefore
01:35interest rates stay higher for longer.
01:37The Master Builders Association is also sounding the alarm. While construction inflation has
01:42come down, costs and interest rates remain high and together it's putting a dent in demand.
01:49Master Builders is very concerned that we won't see a change in February. We're still
01:53seeing stubbornly increasing costs, inflation still high.
01:59Tomorrow's inflation figures are make or break as to whether there'll be an interest rate
02:03cut when the Reserve Bank Board meets in three weeks' time. For the Prime Minister struggling
02:08in the polls, a rate cut could offer a circuit breaker beyond anything else directly within
02:14the government's control.