Material prices across Australia are continuing to rise despite global markets easing, with industry experts warning that deep-rooted productivity problems are driving the nation’s escalating construction costs.

The Productivity Commission’s 2025 report shows housing productivity has plunged more than 53 per cent over the past three decades, meaning it now takes twice the effort and cost to deliver the same level of housing output as 30 years ago. The decline comes amid a worsening national housing crisis, with projects taking longer and requiring more labour per dwelling.

These inefficiencies have created ripple effects through the supply chain, forcing material suppliers to adjust to volatile demand and pushing local prices higher. Skills shortages and a surge in construction insolvencies — up 21 per cent to a record 3,595 cases in 2024–25 — are adding further pressure.

Quarterly data highlights the structural imbalance: concrete prices rose 2.5 per cent this quarter and 6.6 per cent year-to-date, while plasterboard jumped 4.3 per cent over the quarter and 6.5 per cent annually. Bricks climbed 6.4 per cent over the year, despite a slight quarterly dip. Steel prices edged higher, while global oversupply has done little to ease costs.

In contrast, diesel prices fell 6.5 per cent this quarter, returning to pre-pandemic levels, and copper pipe prices rose 6.7 per cent, reflecting genuine demand from electrical trades rather than inefficiency.

Cost escalation is forecast to remain elevated through 2027, led by Brisbane at 7.0 per cent next year, before easing slightly. Sydney and Melbourne sit around 4.5 per cent, and Perth is projected at 5.75 per cent.

Analysts say international price drops are failing to reach local markets because domestic inefficiencies dominate final costs. Extended project timelines, stop-start production, and high energy use are eroding savings.

Experts argue that genuine cost relief will only come when productivity improves through modular construction, offsite manufacturing, standardised design, and digital project management. Until then, Australia’s construction sector faces a prolonged period of high costs, shrinking margins, and worsening housing shortages.