Rising construction costs threaten new seniors living projects
- Costs still rising: Construction inflation forecast above 5% through 2028
- Projects under pressure: Operators face higher build costs or redesigns
- Brisbane leads: Olympic-driven demand expected to push costs sharply higher
- Supply challenge: New retirement living developments become harder to stack up
Retirement village and aged care developers face another three years of above-average construction cost growth, according to new forecasts.
Data from quantity surveying firm WT’s latest Australian Construction Market Conditions Report shows national building cost escalation is expected to reach 5.5% in 2026, easing only slightly to 5.3% in 2027 before rising again to 5.8% in 2028.
SATURDAY: Aged Care and Retirement Living costs increase 30% on previous year
The outlook comes as the seniors living sector faces growing pressure to increase housing supply for Australia’s ageing population.
Earlier this month, retirement living operator Levande said it now costs about $1 million to build a single unit. The operator currently has seven retirement village developments under construction across New South Wales, Victoria and South Australia.
This is costing retirement villages $1.3 billion a year and going to rise
WT said underlying construction cost pressures remain significant, even when excluding the direct impacts of the Middle East conflict that erupted in February 2026.
“The direct impacts on construction costs have been significant in some areas, particularly for infrastructure projects with heavy reliance on oil products,” WT Construction Economist Damon Roast said.
“But for many building project types, the affected materials represent a relatively small proportion of overall costs, and the presence of substitute materials or alternative sourcing is helping to cap price pressures.”
Queensland is expected to remain one of the nation’s most challenging markets, with Brisbane building cost escalation forecast to reach 6.5% next year and climb to 10% by 2028 as Olympic-related activity intensifies.
Perth is also forecast to record strong escalation of 6.7% in 2026, while Sydney and Melbourne are expected to remain comparatively softer at 4.8%.
For retirement village and aged care operators with projects in the pipeline, continued construction inflation is likely to place further pressure on development feasibility at a time when demand for seniors housing continues to grow.
