Construction costs index ranks Sydney and Brisbane as most expensive cities to build in

Two cities have earned the unenviable title of most expensive to build in, with wildly unproductive construction workers aggravating the problem.

Brisbane is ranked the second most expensive Australian city to building behind Sydney as construction workers productivity plummets.

An international survey has ranked Sydney and Brisbane the most expensive Australian cities to build in, with diving productivity among construction workers fuelling the crisis.

Arcadis national service lead, cost and commercial management Matthew Mackey said the data had revealed a startlingly significant decline in productivity, with construction workers averaging only 2.8 days of productive work per week, down by over 50 per cent from the pre-pandemic norm of a six-day work week.

“Despite having access to a larger workforce in 2023 compared to 2018, the industry delivered fewer total hours, creating headaches for clients and contractors alike,” he said.

“The impact of any tariff trade war is difficult to predict. Tariffs may lower investor confidence, although most construction projects are driven by public sector/government

investment.

“The private sector is much more subdued as clients try to reconcile the cost versus value challenge. Any negative impact on sentiment will further delay recovery.”

There is no suggestion this worker is not productive.

On a world scale, Arcadis’ International Construction Costs 2025 top 100 index ranked Sydney 45th on the list of the world’s most expensive cities to build in, with Brisbane at Brisbane 52nd, Melbourne 57th, Perth 58th and Adelaide 71st.

Mr Mackey said inflationary pressures – ranging from 6 per cent to 10 per cent – had also pushed construction prices in Australia higher, driven by a modest recovery in workload alongside an alarming decline in labour productivity to just under three days of productive work days a week.

“With the exception of Melbourne, all Australian cities experienced upward movement in construction costs,” he said.

“The inflation levels suggest Australian cities are becoming less competitive in terms of affordability compared to other global markets.

“But construction-specific inflation is expected to remain stable in 2025 for Australia, with no deflation anticipated. This reflects continued pressure on construction costs but moderated escalation compared to previous years.”

Workers are seen at a construction site in Brisbane.

According to the international index London fell to second place, surpassed by Geneva, with Zurich, Munich and New York rounding out the top five most expensive cities.

Mr Mackey said data centres remain one of the stronger growth markets, but some clients are now beginning to focus on alternative locations such as India and consequently are reducing their pipeline in Australia.

“However, large-scale mixed-use residential and commercial precincts are on the agenda,” he said.

“Olympic venues and precincts in Queensland, will drive much of the market over the next few years.”

Arcadis is a global design, engineering and management consulting company based in the Zurich, Amsterdam, Netherlands.

Originally published as Construction costs index ranks Sydney and Brisbane as most expensive cities to build in