Brisbane construction costs to soar by 30 per cent over five years as Olympic build quickens

The cost of building is slowly easing across most of Australia – but one capital city is facing bone-rattling inflation that puts big projects at risk.

An artist impression of Brisbane Stadium in Victoria Park for Brisbane 2032 Olympics. Source: Queensland Government.

Soaring costs will continue to weigh on the Brisbane construction sector for the next five years as the Olympic infrastructure program kicks in, according to global engineers Arcadis.

The company’s Half-Year Construction Market View found significant barriers were standing in the way of the rapidly growing project pipeline and construction cost escalation remains above long-term trends in Brisbane.

The report found that while building costs in Sydney and Melbourne are easing, Brisbane faces pipeline-driven pressure, while a buoyant market is fuelling steep inflation in Perth.

According the report from the global engineering giant, the 2024 Brisbane buildings cost escalation came in at 5.2 per cent, just below the 6 per cent previously forecast, owing to a slower start than expected to the city’s Olympic infrastructure program.

It said the Olympic program, along with capital works in health, will be a significant driver of demand.

“Consequently, the next several years are expected to see renewed upward pressure, with Arcadis projecting 5 per cent escalation for 2025 and a total buildings inflation of 30.5 per cent by 2029,” the report said.

“Brisbane’s construction market is experiencing acute labour shortages, with a shortfall of more than 41,000 workers reported in early 2025, and Enterprise Bargaining Agreements driving up wages.

“The city’s construction sector is grappling with widespread delays and postponements across key projects. Innovative project delivery models — including profit-sharing and risk-sharing arrangements — are emerging in response to viability challenges, but the pace of procurement on Olympic projects remains a concern as timelines tighten.”

The 2024 Brisbane buildings cost escalation came in at 5.2 per cent over the next five years will be over 30 per cent.

The report found in 2024 Melbourne’s cost escalation was 5.5 per cent, more than the forecast 3.2 per cent, Sydney was 5.1 per cent (5.2 per cent) and Perth 10.4 per cent (11.1 per cent).

However, over the next five years Melbourne has a total building inflation rate of 25.5 per cent, Sydney 27.9 per cent, Perth 42.4 per cent and Brisbane 30.5 per cent.

Matthew Mackey, executive director, Cost & Commercial Management at Arcadis said it was promising to have a line of sight for the Brisbane Olympics, with a city-shaping narrative for projects helping boost confidence among developers and contractors.

“However, we need to act quickly to ensure projects can be completed in time. Government has put in place the legislation to pave the way for planning, but it remains unclear how the work is going to go to market,” he said.

Across Australia, while the nation’s GDP was forecast to grow by 1.5 per cent in 2025 and 2026, the construction sector is lagging, hampered by persistent labour shortages, rising insolvencies, and structural inefficiencies.

The report said that despite these headwinds, the construction industry was buoyed by a strengthening pipeline of public infrastructure, emerging opportunities in renewable energy, and improving market sentiment in several states.

Labour shortages remain a critical issue.

Arcadis said that labour shortages remained a critical bottleneck, with the sector needing an estimated 90,000 to 130,000 additional workers nationwide. This deficit is pushing up wages and intensifying competition for skilled talent, while insolvencies continue to reduce the industry’s overall capacity.

Mr Mackey said a crucial turning point has arrived with the recent federal election, which returned Labor with a mandate to address housing affordability, expand defence infrastructure, and modernise industry regulation.

However, the ability to deliver on their agenda rests on the sector’s capacity

“While sentiment across the sector is improving and project pipelines are solidifying, labour shortages and cost pressures continue to bite.” Mr Mackey said.

“The challenge now is converting optimism into delivery, through innovation, workforce planning, and genuine collaboration. Government stimulus is a welcome tailwind, but without targeted action on skills and delivery models, policy ambition risks outpacing what the industry can deliver.”

Originally published as Brisbane construction costs to soar by 30 per cent over five years as Olympic build quickens