WT forecasts renewed cost escalation as Brisbane 2032 and housing demand fuel next construction cycle
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View of Brisbane city and the Brisbane River, Queensland, Australia
The Australian construction industry is bracing for a significant surge in cost escalation starting in 2027, driven by major projects related to the Brisbane 2032 Olympics and a resurgence in Sydney and Melbourne’s construction activities. This is according to WT’s latest Australian Construction Market Conditions Report, which was released today.
This comprehensive report extends WT’s national cost outlook to 2028 and indicates that while short-term pressures are slightly easing, a new wave of cost escalation is already on the horizon. The report forecasts an average escalation of 5.2% for building projects—the lowest level in six years—and 5.0% for infrastructure in 2026. However, these costs are projected to rise to 6.4% and 5.8% respectively by 2028.
Brisbane is anticipated to lead the nation with a projected building cost increase of 10%. Meanwhile, Sydney and Melbourne are expected to see building costs rise by an average of 4.75–5.0% per year. This shift is largely attributed to resources and labour moving north as local activities in these cities rebound.
Damon Roast, WT’s construction economist, highlighted the importance of strategic planning to navigate these upcoming challenges. “Queensland’s infrastructure and building boom will have national consequences,” Roast stated. He further explained, “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.”
The report also notes that while infrastructure escalation is expected to be slightly lower than building costs, the next cost cycle will shift focus from traditional roads and rail projects to renewables, transmission, and water infrastructure. This shift is expected to create new regional pressure points. Roast elaborated on this point, saying, “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.”
Despite these challenges, there are early signs of stabilisation in the economy. WT sees opportunities for better cost control through data-led digital solutions such as Building Information Modelling (BIM). These technologies could potentially mitigate some of the pressures by enhancing efficiency and precision in project execution.
The report provides a detailed breakdown of escalation forecasts and drivers across 13 markets and major sectors, offering valuable insights into the future landscape of Australia’s construction industry. As the country prepares for the Brisbane 2032 Olympics, the pressure on resources and labour is expected to reach unprecedented levels, necessitating strategic planning and innovation to ensure timely and cost-effective project delivery.
The construction sector’s response to these forecasts will be crucial in determining how well it can manage the anticipated demand. The insights provided by WT’s report will likely serve as a critical tool for industry stakeholders as they plan for the future. As Roast pointed out, “The sector has little buffer to absorb another wave of simultaneous demand,” underscoring the urgency for strategic investments in skills and capacity to meet the upcoming challenges.