Property Australia

Construction’s ups and downs

Karen Jamal Karen Jamal August 3, 2021

Sydney remains Australia’s most expensive construction market, despite falling from 13 in 2019 to 43 in global rankings in 2021, and labour availability could decline, according to global research from Turner & Townsend.


Three key takeaways:

  • 64% of the world’s construction markets are suffering from skills shortages, according to Turner & Townsend’s latest International Construction Market Survey
  • Costs continue to rise, with Australia’s average hourly rate increasing from $87.4 to $99.7 between 2019 and 2021
  • With an average cost of $2,640 per sqm, Sydney pipped Melbourne ($2,576 per sqm and ranked 45), Brisbane ($2,448 per sqm and 51) and Perth ($2,142 per sqm and 53); Adelaide, at $2,070 per sqm, is a new addition positioned at 54.


“The future is looking very positive for the construction market in Australia over the next five years,” says Anooj Oodit, Turner & Townsend’s managing director for Australia, New Zealand and Asia.

“However deteriorating skills shortages and further supply chain constraints caused by COVID-19, lockdowns and border restrictions could slow progress.”

Turner & Townsend’s International Construction Market Survey 2021 analyses input costs, such as labour and materials, across 90 global markets for residential, commercial, hotels, industrial and retail.

The latest survey ranks Australia’s capital city markets as ‘warm’ – suggesting each state will increase activity in future years. Notably, Perth moved from ‘lukewarm’ to ‘warm’.

Tokyo takes the number one spot as the costliest city to undertake construction with an average cost of $5,465 per sqm, followed by Hong Kong ($5,317 per sqm) and San Francisco ($5,080 per sqm). Chennai, at $670 per sqm, was the least expensive city surveyed.

New York topped the list for the highest average hourly construction labour rate, reaching $148.

Turner & Townsend expects labour availability in Australia to decline over the next three years with skills shortages increasing across all markets. Brisbane is currently the only market where skills are in balance.

Globally, demand for steel, reinforcement, timber and copper products have seen prices rise sharply – by up to 40 per cent in some international cities. In Sydney, the cost of reinforcement increased by 20 per cent early this year and is expected to double again by mid-2021, Turner & Townsend says.

“The rapidly rising cost of building materials is expected to have a significant impact on project costs in Australia over the coming months,” Oodit warns.

“Freight costs have tripled which has put huge supply constraints on global ports, largely attributed to accelerating ecommerce demand.”

Oodit is nevertheless optimistic. Government spending on infrastructure projects in Australia will aid economic recovery, and “the region’s prospects look solid”.