Sydney ranked Australia's most expensive city for construction

Sydney continues to be Australia’s most expensive city for construction, Arcadis’ International Construction Cost Report 2020 reveals.

According to the report, Sydney ranked 30th out of 100 global cities, climbing four spots from last year. Sydney is followed by Brisbane at 38, Melbourne at 41 and Perth at 50.

The report highlights that the cost of construction in Australian cities is heavily impacted by the slowing economy and a decline in construction work over the last three years, particularly within Sydney and Melbourne’s residential sectors.

“However, this was countered by an increase in demand for non-residential and infrastructure projects in other cities,” the report reads.

Arcadis National Director Cost & Commercial Management Australia Pacific Matthew Mackey said despite construction levels falling over the last few years, construction costs have continued to rise in the majority of Australian cities.

“The impact of the COVID-19 pandemic on local construction costs is expected to be significant – although it is extremely difficult to predict to what extent and for how long,” he said.

“Unlike the last global downturn following the events in 2008, the impact of COVID-19 is not about the availability of cash. Rather, it is about our inherent ability to physically go to work and maintain cash flow.”

As such, Mr. Mackey said that when the economy starts returning to “some semblance of normal”, there will likely be a spike of super inflation in some markets.

“This spike will be caused by numerous projects either starting or re-starting over a short period due to an abundance of cash, but with little immediate resource availability to deliver the work,” he said.

“The limited availability of resources at all levels of the supply chain, which has been an almost continuous feature of the Australian market over the last few years, is expected to worsen as job losses continue to hit.”

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