Sustained growth in sector investment is required to solve unsustainably high escalation. When will this shift begin and what will happen to markets in the interim? Our latest report explores how elevated construction cost escalation might be resolved and the key signs to watch out for.
November 2024 report highlights
- Cost escalation forecast to 2027 remains stubbornly elevated, around 5 per cent per annum on average nationally.
- The three-year base case outlook for building is forecast of an average of 5.5% in 2024, remaining above 5% through 2026 before jumping to 5.7% in 2027.
- The three-year base case outlook for infrastructure is 4.8% this year, moving back around 5.5% to 2026, and remaining above 5% in 2027.
- Recovery in construction activity and the broader economy should become apparent by 2026, which would make the overdue increase in sector investment more attractive.
- Necessary sector investment would play a key role in increasing downward pressure on escalation from 2028.
