Australian Non-Residential Construction, Plant and Equipment Market Conditions, Q3 2025

Construction Sector Conditions Q2 2024 to Q2 2025

Growth in building construction output prices continued to be driven by rising labour costs. Annual wage increases for many employees working on larger construction projects combined with the ongoing high demand for electrical services, formwork and finishing trades impacted output prices. Ongoing activity in the public sector, impacting the non-residential market and infrastructure sectors, continued to drive competition for limited resources such as labour and concrete.

Non-residential construction prices were driven by rises in NSW, Victoria and WA. Cost growth in these and other states was primarily due to labour costs, including scheduled annual wage rises for some employees working on large projects covered by key enterprise agreements, and the ongoing skilled labour shortage. Concrete and electrical services also saw sharp price increases due to strong demand and increased input costs.

Commercial and industrial building construction price growth for Q2 2024 to Q2 2025 year is summarised in the table below.

Plant and Equipment

The Australian Bureau of Statistics most recent Producer Price Index (Output of the Manufacturing Industries series) provides useful insights into indicative cost growth over the year to Q2 2025 across several industry groupings. Higher than average price growth was seen for areas such as transport equipment, professional and scientific equipment, pumps and compressors, mining and construction equipment, and general furniture.

Given the above, average price growth over the last year for industry groupings is detailed below:

What Does the Future Hold?

Australia’s construction sector continues to face persistent cost pressures in 2025, with national building cost escalation forecast at 5.3% and infrastructure costs close behind at 5.1%, according to project advisory firm WT^[2].

Brisbane remains a national hotspot, with forecast infrastructure escalation at 6.5%^[3]. Ongoing demand from health, education and Olympic-related projects is expected to strain resources for years to come.

Aon expects to see a continued decoupling of Producer Price Index (PPI) and Consumer Price Index (CPI) cost pressures. A complex mix of strong construction pipelines and persistent cost risks remain. While some regions might show early signs of moderation, broader investment in skills and materials capacity is still lagging. Without it, elevated cost escalation could persist longer than expected.

References 

[1] Australian Bureau of Statistics, Producer Price Indexes Australia, Output of the Construction Industry, June 2025

[2, 3] WT, Australian Construction Market Conditions Report, June 2025, June 2025