Inflation moves towards target but builders caution against complacency

Master Builders Australia

30 October 2024

While annual inflation is back within the Reserve Bank of Australia’s target band for the first time since 2021, Master Builders Australia has warned temporary energy relief and rent assistance measures are masking systemic housing inflationary issues.

The housing crisis continues to put a strain on Australians with new data from the Australian Bureau of Statistics (ABS) confirming that housing related inflation is once again higher than it should be.

Master Builders Chief Economist Shane Garrett said the annual inflation rate dropped to 2.8 per cent during the September quarter.

Measures of underlying inflation offer a truer view of the inflationary picture. On this score, inflation still looks too high: trimmed mean inflation clocked in at +3.5 per cent.

Over the past year, rents are up by 6.7 per cent while the cost of new dwelling purchase is 4.8 per cent higher.

Australia’s rate of inflation would be markedly lower if housing cost pressures weren’t so strong,” Mr Garrett concluded.

Master Builders Australia CEO Denita Wawn said housing costs continue to put upward pressure on the inflation rate and is prolonging the pain being felt by families.

“Increasing the supply of new homes, including rental accommodation, is crucial.

“A number of barriers continue to hamstring the industry’s ability to speed up the delivery of new homes including high building costs, labour shortages, CFMEU disruption and pattern EBAs, and planning delays.

“We can’t keep dragging our feet with the housing crisis. Meaningful action to address supply-side barriers in the housing market is not happening fast enough.

“Most of the solutions to the housing crisis are in ministerial portfolios outside of the housing portfolio so Ministers need to be working together to get the job done.

“For example, the industry is still awaiting the outcome of the reviews into the apprenticeship incentives system and the skilled migration core skills occupation list. These are both crucial if we’re going to tackle labour shortages,” Ms Wawn concluded.

Media contact: Dee Zegarac, National Director, Media & Public Affairs

0400 493 071 | dee.zegarac@masterbuilders.com.au