Construction costs to rise 3–6% a year: what it means for AU homes
A JLL forecast puts yearly construction cost growth at 3–6%, with Australia singled out. Here is what that means for your renovation budget.
Expect renovation prices to keep climbing. According to CRE Daily, property adviser JLL now treats annual construction cost growth of 3% to 6% as the figure to plan around, up from the 2% to 3% norm before 2020. For homeowners, the practical advice is to lock in quotes sooner rather than later.
What JLL found
CRE Daily's summary of the JLL report makes these points:
- Global construction costs are forecast to rise 3.5% to 4.7% in 2026 and 3.1% to 4.2% in 2027.
- Asia Pacific, the region that includes Australia, is forecast at 3.8% to 4.7% for 2027.
- Over the past five years, tender prices have outpaced general inflation in most markets. Australia, Germany and Singapore show some of the biggest gaps.
- Construction pay has risen between 8% and 35% across markets since 2020. JLL expects similar yearly gains through 2027.
- Skilled labour shortages were reported in 64% of the markets JLL surveyed. Electricians were short in 64% of markets and plumbers in 58%.
JLL's report is aimed at commercial developers and occupiers, not households. Its figures are global and regional averages, not Australian home renovation prices. But the pressures it describes are the same ones that drive what tradies charge: labour, materials and supply chains.
Why trades matter most for home projects
Labour is the biggest variable in most of our estimates. We calculate each project from labour hours multiplied by local rates, plus materials, then check the result against market prices and real quotes. If wages keep rising and electricians and plumbers stay scarce, jobs that need both will feel it first.
That points to wet-area and electrical-heavy work:
- A mid-range bathroom renovation typically costs $22,000, with most jobs between $17,100 – $28,500. See our [bathroom renovation guide](Bathroom renovation).
- A mid-range kitchen renovation typically costs $20,000, with a usual range of $15,600 – $26,000. See the [kitchen guide](Kitchen renovation).
- Rewiring a house typically costs $11,000, in a range of $8,550 – $14,300. See the [rewiring guide](House rewiring). Electrical work must be done by a licensed tradesperson.
- Replacing a hot water system typically costs $2,100, in a range of $1,650 – $2,750. See the [hot water guide](Hot water system replacement). Plumbing work also needs a licensed tradesperson.
Bigger-ticket jobs
Percentage rises hurt more on larger projects. A 4% rise on a roof replacement, typically $15,000 at mid-range, is a bigger dollar amount than the same rise on a fence. Other large jobs to watch:
- Roof replacement: usual range $11,700 – $19,500. See the [roof guide](Roof replacement).
- Windows: typically $5,000, in a range of $3,900 – $6,500. See the [window guide](Window replacement).
- Solar panels: typically $8,900, in a range of $6,950 – $11,600. Solar prices are usually quoted after small-scale technology certificates (STCs), a federal discount that steps down each year until the scheme ends in 2030. That scheduled step-down is a reason not to wait on solar.
How to protect your budget
JLL's advice for commercial clients translates well to households. It recommends bringing in cost advice early and locking in prices on volatile parts of a project. For a home renovation:
- Get at least three itemised quotes and compare labour and materials separately. Our quote checker ("is my quote fair") can help you see whether a figure sits within a normal range.
- Ask how long a quote is valid. A fixed-price contract with a clear start date gives you more certainty than an open-ended estimate.
- Order long-lead items early, such as windows, doors and cabinetry, if your builder agrees.
- Build a buffer. If your project is a year away, a 3% to 6% annual rise is a sensible planning assumption, in line with JLL's baseline. It is not a forecast for any one trade or suburb.
- Be flexible on materials. Our material comparison tables show where you can save without changing the scope, for example in flooring or worktops.
Quotes to households include 10% GST, and all of our figures include it.
What we are watching
JLL expects similar pressure through 2027, and it describes managing costs as a matter of working within volatility rather than waiting for it to pass. We update our cost model as market prices and quotes move, so the figures above reflect current conditions. If you are weighing up a renovation, check the live figures in the relevant guide before you sign.