Australia’s construction market is set for another surge in cost escalation from 2027, as major projects ahead of the Brisbane 2032 Olympics combine with renewed upswings in Sydney and Melbourne, according to WT’s latest Australian Construction Market Conditions Report.
The report, released today, extends WT’s national cost outlook to 2028 and signals that while short-term pressures are easing slightly, the next escalation cycle is already taking shape.
Nationally, WT forecasts average escalation of 5.2% for building – the lowest level in six years – and 5.0% for infrastructure in 2026. However, costs are projected to rise to 6.4% and 5.8% respectively by 2028.
Brisbane is expected to lead the nation, with building costs rising by 10%. In Sydney and Melbourne, building costs are forecast to increase by an average of 4.75–5.0% per year, as resources and labour shift north while local activity rebounds.
WT’s construction economist Damon Roast said the data highlights the return of capacity constraints and the growing importance of strategic planning to maintain delivery certainty.
“Queensland’s infrastructure and building boom will have national consequences,” Roast said.
“As Olympics-related and housing projects ramp up, we expect competition for labour, materials and capability to intensify – particularly in 2027 and 2028. The sector has little buffer to absorb another wave of simultaneous demand.”
While infrastructure escalation is expected to remain slightly lower than building, WT notes that the next cost cycle will be driven less by roads and rail, and more by renewables, transmission, and water infrastructure, creating new regional pressure points.
Roast said the data also shows that indirect costs such as financing, insurance and compliance continue to exert upward pressure.
“The risk isn’t just price growth – it’s capability. Without renewed investment in skills and sector capacity, the next construction upswing could quickly strain delivery systems,” he said.
Despite the challenges, WT sees early signs of stabilisation in the economy and opportunities for better cost control through data-led digital solutions such as BIM.
The full Australian Construction Market Conditions Report – November 2025 provides a detailed breakdown of escalation forecasts and drivers across 13 markets and major sectors.