What's actually happening in the Sydney building market right now?

Comparing the current market to COVID – lessons learned and what to expect

The current building environment feels uncertain again. (Hello memories of COVID).

Interest rates have risen, inflation remains a focus, and global events — particularly around energy and supply — are starting to re-enter everyday conversation. It’s understandable that many homeowners are questioning whether now is the right time to build, or whether it’s better to wait.

While we can’t predict the future, we can learn from the past. In this article, I’ll look at what is actually happening in the market —and how it compares to what we experienced just a few years ago.

COVID was the “perfect storm”

It’s easy to assume that what we saw during COVID is simply how the building market behaves under pressure. In reality, that period was highly chaotic.

It wasn’t just inflation. It was a combination of major factors hitting all at once:

• Unprecedented  demand, driven by stimulus and the Home Builder grant. Pools, decks, cabanas and investment homes — a disproportionate number of families used this period to build something, large or small.
• Global supply chain disruption. Stay-at-home mandates forced factories to shut down, global demand surged, and shipping logistics broke down. Shortages and lead times reached unprecedented levels.
• Labour  shortages across multiple trades. It wasn’t just new homes requiring trades — small-scale work, large commercial projects and government infrastructure all competed for the same labour pool. Many trades also left the industry during COVID, and with limited migration, a significant labour gap emerged.
• Extended  periods of poor weather. Sydney experienced record rainfall in 2021 and 2022, with major floods in March 2021, March 2022 and July 2022.  Construction slowed significantly — sites needed time to dry, and many  trades simply couldn’t operate in those conditions.
• A shift in social needs. With more time spent at home, both locally and globally, demand for improvements increased. This placed additional pressure on already strained supply chains, particularly for materials like timber.

The result was a system under strain — and many buildersweren’t prepared. Materials became difficult to source, build times extended significantly, and pricing became difficult to predict.

That environment was not typical — and importantly, it is not where we are today.

What is the market like today?

Demand has now normalised.

Supply chains are more stable, materials are generally available, and trades are more accessible. Timeframes for approvals and construction are also improving.

At the same time, new pressures are emerging.

Global instability — particularly around energy — is beginning to influence costs again. Fuel prices have a broad impact, affecting not just construction but transport and materials. Some of this is likely to flow through to building costs, although the extent remains uncertain.

There is also a broader effect. Rising fuel costs tend to reduce discretionary spending, which can help ease inflation more generally.

The market today sits somewhere between stability and uncertainty — more balanced than COVID, but still sensitive to global conditions.

How will builders respond?

Most reputable builders are still “match fit” from the volatility of COVID.

Many are closely monitoring the market and staying in regular communication with suppliers and trades to understand any changes.

The general position of builders today is:

• Keeping pricing relatively stable — with many still carrying some level of COVID-era buffer
• Maintaining regular dialogue with suppliers and trades to track cost and supply changes
• Avoiding pipeline overcommitment — a key lesson from COVID
• Operating with improved systems, reporting and cost control processes

Builders, broadly, have a better handle on costs now than they did during the peak of COVID disruption.

In some cases, projects may still carry elements of caution in pricing — not because costs are rising rapidly, but because builders are protecting against the risk of them doing so.

Will building ever get cheaper?

This is the question many homeowners are asking.

After COVID, there was a general expectation that construction costs would fall once demand slowed. In reality, that hasn’t happened.

Some builders may revert to aggressive pricing to win work,but history shows those models often struggle in uncertain conditions.

Costs have stabilised — but they haven’t meaningfully reduced.

This reflects a broader economic reality. Inflation may slow, but it rarely moves backwards. The Reserve Bank’s target remains positive inflation over time, not deflation.

Waiting, in most cases, does not lead to significantly lower construction costs. It simply delays the decision — often at the expense of time.

The big difference from COVID is timeframes

One of the more understated changes in the current market istime.

With demand at more normal levels, there is greater availability across designers, consultants, councils, suppliers and builders.Projects are moving through approvals more efficiently, and construction programmes are more consistent.

Build times are also massively improving, with fewer delays from weather, supply and labour constraints.

For those more focused on timing than cost, this is a more controlled and less congested building environment.

Inflation vs Investment — the broader property context

It’s also worth stepping back and looking at the bigger picture.

Construction costs have increased over time — but so has the value of land, particularly in established Sydney suburbs.

Over the long term, Sydney property values have generally outpaced construction inflation. While this is not linear year-to-year, it highlights an important point: the value of a well-located, well-designed homeis influenced by more than just the cost to build it.

So when is good timing?

There is rarely a perfect time to build.

Markets cycle, macro conditions change, and uncertainty is always present in some form.

The more useful questions tend to be:

• Are we financially ready?
• Do we understand what we want to build?
• Are there elements we can stage over time (such as pools or landscaping)?
• What are our alternatives?

These factors tend to have a greater impact on the outcomethan timing alone.

A final thought

The current market is not without its challenges. But it is also not experiencing the same level of disruption seen during COVID.

For those considering building, the focus should be on clarity — understanding the site, the budget, and what is realistically achievable.

The conditions may not be perfect. But with the right approach, they are workable.

If you’re considering building

The first step is usually a conversation.

Understanding your block, your budget, and what may be possible is often enough to bring clarity — whether that’s to move forward now,or simply to be better prepared for later.

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