Heavy metal rocks construction costs and forces delays in housing

A NEW property report has suggested the use of copper could have one of the biggest impacts on the completion of property projects in Australia.

Altus Group recently presented its Australian Construction Price Outlook Q4 2025 report and found copper as a big player in a spike in construction costs.

“Copper prices surpassed $US13,000 per tonne early in 2026, driven by tight mine supply and a structural surge in demand from electrification, renewables and sate centres,” said Niall McSweeney, head of development advisory for Altus Asia-Pacific.

“S&P Global expects copper demand to rise from 28 million tonnes in 2024 to 40 million tonnes in 2040.

“Without major new supply, annual deficits could reach 10 million tonnes, around 25% below projected demand.

“This matters for Australia because copper is no longer just a commodity. It is a signal of global industrial pressure that local markets must absorb.

“China also consumes around half of global supply, while power grinds and AI-driven data centres are the fastest-growing sources of demand.”

This pressure shows up on Australian construction sites, as it flows directly through the services trades – electrical, mechanical, plumbing and vertical transport – where copper is embedded late in the build and difficult to substitute.

Altus Group’s data shows copper prices are up 16.5% year on year, with electricians, plumbers, mechanical contractors and lift installers increasingly exposed to escalation between pricing and mobilisation.

On larger jobs, that cost escalation is frequently measured in six figures. Altus Group is expecting two further price rises in electrical cable this year.

“At the same time,  ASIC statistics show construction has the highest rate of insolvencies, with 1894 recorded in the financial year to February 2026,” McSweeney said.

“In this environment, copper is the rare material where global demand pressure and on-site delivery risk reinforce each other, turning time itself into a cost multiplier.

“Public investment is absorbing a growing share of national construction capacity, particularly across infrastructure, energy and transmission, competing directly with private-sector projects for the same labour and services trades.

“At the same time, delivery timelines are stretching: housing approvals and commencements have lifted, but completions have not followed.

“In a market where delays are now structural rather than exceptional, late-stage, services-heavy materials like copper carry disproportionate risk and escalation accelerates the longer projects take to reach site.”

Altus Group said the Consumer Price Index (CPI) rose 3.8% in the 12 months to December 2025, following a 3.4% rise in the 12 months to November 2025. Housing was the largest contributor to annual inflation, rising by 5.5%.

“Housing is where inflation is most entrenched and where relief looks least likely,” McSweeney said. 

“Higher interest rates don’t just hit households – they also hit construction inventory strategies, willingness to discount, contract terms and escalation causes.”

The report showed that before 2020, housing completions typically lagged approvals and commencements by around 6-9 months, making them a reliable indicator of future housing supply.

Post pandemic, approvals and commencements have lifted but completions have failed to follow, leaving a widening gap between what is planned and what is delivered.

Labour shortages, builder failures, tighter financing and longer build times have stretched delivery well beyond historical norms.

“To meet the national target of 1.2 million new homes over five years, completions need to average around 60,000 dwellings each quarter. Current trends are materially short of that mark,” the report added.

“What we have is a structural supply problem: activity at the front end of the pipeline that is no longer translating into homes on the ground,” McSweeney said.

“The longer that gap persists, the more it amplifies cost, risk and delay across the system.

“The result is a construction market where pricing power is returning, discounting has ended and late-stage materials like copper expose previously hidden risks.”