Australia Property Prices Rising: Construction Costs, Materials and Fuel Driving the Market
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What are the current trends in Australia's property market?
It's the Real Estate Podcast brought to you by ANZ Home Loans for financial well-beings.
And it's the Real Estate Breakfast, your weekly pulse on Australia's property market where numbers meet what's actually happening on the ground. And remember, we are independent and not tied to any real estate agency or developer, which is pretty important. Straight insights and the facts behind the property headlines. We've got a few of those coming up this morning. It is a Thursday into April, April the 2nd. Happy birthday to you if you are celebrating a birthday. Couple of actors. Pedro Pascal is turning 51. Michael Fassbender is only 49. And it was on this day back in 1968. If you saw the movie, you'll know what I'm about to talk about. Space Odyssey premieres globally. The Stanley Kubrick film airs.
How the computer taking control of the spacecraft and the ability to read lips when the astronauts thought that they were in a safe place. Once again, the movie becoming a reality. Hey, good morning. If you are on the Sunshine Coast and especially in Caloundra, because we're just going to have a quick look at the median price, where a house median price is around that $870,000 mark. Days on market there, 34 days. Units, the median price is Six hundred and seventy five. Well, it kind of ranges between a one bedroom at that price and it goes right up to one point four million for units in Caloundra. Boy, has that area expanded or what? Let's right now go to Melbourne and catch up with Trent Wilcher.
He is the manager of research from RLB. And a very good morning to you, Trent. Welcome along to the Real Estate Breakfast. Nice to have you on this morning. And you were telling me that you are a AFL follower of North Melbourne. Off to a bit of a decent start this season.
Good morning, Craig, and thanks for having me on. Yes, I'm a Roos fan, long-suffering Roos fan, but there's some positive signs this year. Been to two wins out of three games, so not a bad start.
Yes, well, Meatloaf did have that song, two out of three ain't bad. So, yep, nice start for North Melbourne in the AFL. Now, you guys have got a report out with regard to the Iran conflict, have you?
We do. So the RLBs are large quantity surveying firms. They're looking at construction costs. That's the core of our business. So we put out a piece of work just trying to assess what the Middle East conflict means for construction costs as a whole. So it's a hard thing to do. given that the situation is changing quite a lot. We've tried to just give some insights into where we think things stand now and where it could end up if the best case scenario where the war ends quite quickly or potentially a worst case scenario if it drags on for a while, what that will mean for construction costs.
All right. So this is more of the commercial look right now. So as you say, the material cost, how concerned should some of these developers be right now since we are, as I say, around a month into this conflict?
We've certainly seen cost pressures start to flow through into the sector already. It happened pretty quickly, particularly in that Logistics freight part where lots of companies passed on fuel surcharges straight away. So in the range of 10 to 25%. So that's delivery costs from hardwares or construction material supplies being added surcharges too. We've seen costs rise obviously for diesel. Diesel prices have shot up over 75% and that's flowing into equipment that's used on particularly big projects, but also small projects as well. So that's the immediate impact. And then starting to see this flow into actual costs of materials. So particularly those that are linked to oil. So things like bitumen and asphalt, but also concrete, steel, plastic pipes is another one we've seen big price rises.
So it's really starting to flow through to quite a few products in the construction sector, which will push up prices.
Have you guys done some sort of modelling in terms of the Iran war continuing and what that'll do to these construction costs moving forward?
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