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Home building costs under the hammer



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CORDELL

MEDIA RELEASE

5 September 1995 HOME BUILDING COSTS UNDER THE HAMMER

Joint Statement by Cordell and HIA

HoUfirxQ Intensevcompetition among builders and material manufacturers is keeping the lid on home building costs.

A new building industry survey by Cordell Building Information Services and the HIA shows that the cost of building a typical house rose by a meagre 0.1 of a per cent in the September quarter 1995, giving an annual inflation rate of only 0.5 of a per cent. Increases in New South Wales (up 0.4 per cent), Victoria (up 0.6 per cent), and South Australia (up 0.5 per cent) were offset by falls in both Queensland

(down 1.7 per cent) and Western Australia (down 0.2 per cent). Home building costs fell in four-out-of-six States in the year to the September quarter 1995.

The Cordell-HIA Housing Index Price (CHHIP) provides a leading indicator of new home building costs because it is based on contracts and quotations for future building work.

Cordell-HIA Housing Index Price (CHHIP) - % change

Quarter:

NSW Vic Qld WA SA Tas Aust

- June '95 to Sept '95 0.4 0.6 -1.7 -0.2 0.5 0.5 0.1

- Sept '94 to Sept '95 2.3 -0.5 -1.3 0.5 -0.5 -0.6 0.5

With the large reduction in new housing starts, builders are paring margins to win some building jobs. Low levels of price increases in established housing markets are also keeping the reins on new house prices.

The very low inflation rate in the residential building sector is a good omen both for general levels of inflation and interest rates.

About the Cordell Housing Index Price (CHHIP) The Cordell-HIA Housing Index Price is based on a comprehensive collection of labour, material, plant and subcontract costs associated with the construction of a typical house. Some 20 trades categories

are represented, ranging from preliminary site testing and inspections through to installation of sundry electrical appliances. The mix of the trade categories are those that would apply in the construction of a brick veneer house (cavity brick in Western Australia) on a concrete

slab. Information for the Index is drawn from comprehensive cost surveys undertaken by Cordell._____________________________________________

For further information please contact: HIA Ron Silberberg (06) 249 6366 (b)

Cordell Mike Bartlett (02) 9934 5555 (b)

(06) 299 3553 (h) (02) 418 6169 (h)