Australia’s construction market is poised for renewed cost escalation starting in 2027, driven by the convergence of major projects for the Brisbane 2032 Olympics and resurging activity in Sydney and Melbourne, according to WT’s latest Australian Construction Market Conditions Report, released today.
The report extends WT’s national cost outlook to 2028, revealing that while short-term construction cost pressures are easing somewhat, the next cycle of rising costs is already taking form.
Nationally, WT forecasts average building cost escalation of 5.2 per cent in 2026 — the lowest in six years — before rising to 6.4 per cent by 2028.
Infrastructure costs are expected to grow from 5 per cent in 2026 to 5.8 per cent by 2028.
Brisbane is anticipated to lead the nation in cost increases, with building costs projected to rise by as much as 10 per cent annually by 2028.
Sydney and Melbourne are expected to experience steady annual building cost growth of approximately 4.75 to 5 per cent.
The increase in Brisbane reflects the intense demand linked to Olympic infrastructure development combined with strong housing and renewables projects, while Sydney and Melbourne’s growth is driven by resource and labour shifts northward as local construction activity recovers.
Damon Roast, WT’s construction economist, highlighted the broader implications of Queensland’s construction surge: “Queensland’s infrastructure and building boom will have national consequences,” he 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.”
Roast emphasised that the coming escalation cycle is shaped by capacity constraints and the critical need for strategic planning to maintain project delivery certainty.
The report also notes that infrastructure cost escalation, while slightly more moderate than building, will increasingly hinge on sectors outside traditional roads and rail projects.
Instead, renewables, transmission, and water infrastructure are expected to represent new sources of regional pressure, reflecting Australia’s pivot to sustainable and resilient infrastructure development.
Roast said indirect costs continue to drive upward pressure on the sector: “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 warned.
This points to the critical need for investment in workforce development and sector capability to meet demand.
Despite these challenges, WT also identified early signs of broader economic stabilisation and opportunities for better cost management through the adoption of digital, data-led solutions such as building information modelling (BIM), which can streamline project delivery and improve cost control.
The Brisbane 2032 Olympic and Paralympic Games are a major stimulus underpinning this outlook, with the Australian government contributing $3.435 billion toward venue infrastructure projects that will provide long-term benefits to Queensland communities.
These projects, already underway, include indoor sports centres and stadium upgrades designed to ensure readiness for the Games and legacy use.
Overall, the report provides a comprehensive view of cost escalation drivers across 13 markets and major sectors, signalling a significant phase of renewed cost pressure and capacity challenges ahead for the nation’s construction industry into 2028.
This environment underscores the necessity for industry stakeholders to prepare strategically, invest in skills and capability, and leverage technology innovations to navigate the approaching surge in construction costs amid Australia’s booming infrastructure and building pipeline.
