Housing expenses keep inflation under strain

Australia’s battle against inflation continues to inch closer to target, with the headline annual inflation rate clocking in at 3.5 per cent, but more needs to be done to put downward pressure on inflation in the housing sector.

According to the Australian Bureau of Statistics (ABS), in July 2024, inflation decelerated by 0.3 per cent, the lowest inflation rate since March.

Master Builders Australia CEO Denita Wawn said housing costs continue to put upward pressure on the inflation rate.

“Over the year to July, rents rose by another 6.9 per cent. This is 15.9 per cent higher than pre-pandemic.

“The cost of buying a new home is 5.0 per cent higher than it was 12 months ago, with purchase costs for newly built homes rising 39.7 per cent since before the pandemic.

“Increasing the supply of new homes, including rental accommodation, is crucial.

“A number of barriers continue to hamstring the industry’s ability to speed up the delivery of new homes including high building costs, labour shortages, CFMEU disruption and pattern EBAs, and planning delays,” Ms Wawn concluded.

In addition, the ABS released construction activity data for the June 2024 quarter. In seasonally adjusted terms, there was a marginal increase of 0.1 per cent in the total volume of construction work done.

Chief Economist Shane Garrett said this was driven by a modest uplift of 0.5 per cent in civil and engineering construction activity, while non-residential building activity declined by 0.5 per cent.

“Over the past year, construction activity expanded by 1.2 per cent.

“The civil and engineering sector has done the heavy lifting with growth of 4.8 per cent which is a key area for maintaining economic growth.

“However, residential building activity is down 2.9 per cent over the past year, opposite of where we should be heading.”

Media contact: Dee Zegarac, National Director, Media & Public Affairs
0400 493 071 | dee.zegarac@masterbuilders.com.au