Rising Construction Costs Are Reshaping Body Corporate Budgets: What Owners Need to Know

Every body corporate committee has felt it in the last two years: quotes for repairs, capital works and insurance renewals coming back higher than expected, sometimes dramatically so. It’s not your imagination, and it’s not poor budgeting; it’s a genuine, sustained shift in the cost of maintaining a building.

Why costs have climbed

A few forces are compounding at once across South East Queensland:

• Materials and labour costs remain elevated. Years of supply chain disruption, combined with ongoing skilled labour shortages in the trades, have pushed the cost of common repairs roofing, waterproofing, painting, lift servicing well above pre-2020 levels.
• Insurance premiums have risen sharply. Queensland body corporate schemes have seen premium increases in the order of 25-40% over the past year in many buildings, driven by rising claims costs from severe weather events, higher building replacement valuations, and a smaller pool of specialist strata insurers willing to underwrite Queensland risk, particularly in flood-mapped or cyclone-exposed areas.
• Full-replacement insurance valuations are catching up to real rebuild costs. Queensland law requires body corporates to insure common property at full replacement value, regardless of what the building originally cost to construct. As rebuild costs rise, so do the required sum insured and the premium.
• Major infrastructure demand is competing for the same trades. With Brisbane’s Olympic-linked infrastructure pipeline ramping up, tradespeople and contractors have more work on offer than they can easily service, which pushes quotes higher across the board, including for routine body corporate maintenance.

What this means for levies and sinking funds

The practical impact is straightforward but uncomfortable: budgets set two or three years ago are, in many cases, no longer realistic. Committees relying on outdated sinking fund forecasts are increasingly finding themselves facing special levies rather than gradual, planned contributions.

The schemes weathering this best tend to share a few habits:

1. Getting insurance valuations reassessed more frequently than the legal minimum (every 3 years with annual desktop updates, rather than waiting the full 5-year cycle), so premium increases don’t arrive as a shock.
2. Reviewing sinking fund forecasts annually, not just at the mandated intervals, to reflect current material and labour costs rather than historical ones.
3. Getting multiple competitive quotes and market-testing insurance at every renewal, rather than auto-renewing; even a modest saving compounds meaningfully across a 10-year sinking fund plan.
4. Addressing small maintenance issues early. Deferred maintenance is one of the biggest drivers of both special levies and insurance loadings; insurers increasingly flag unresolved defects as a reason for higher premiums or tighter policy conditions.

Our take

“We’re having more conversations with committees about sinking fund adequacy than at any point in the last decade. The buildings that come through this period in the best shape aren’t the ones that got lucky; they’re the ones that planned ahead, kept their insurance valuations current, and didn’t let small maintenance items become big, expensive ones. That’s really the core of what good in-house management should be doing for owners.”

Ryan Scott, CEO of Pacific Body Corporate Services.

If your scheme’s sinking fund forecast hasn’t been reviewed recently, or your last insurance renewal came in higher than expected, it’s worth having that conversation sooner rather than later. Our team can walk your committee through where your building stands and what a realistic forward budget looks like.

*Pacific Body Corporate Services in-house, Brisbane-based body corporate management for South East Queensland.*