A North Queensland city of around 200,000 people just topped a global cost table ahead of Honolulu and Johannesburg. For builders, the ranking matters less than what sits underneath it, and the forecast says the pressure holds for years.

When a global study of construction costs lands, the headline usually goes to the most expensive city on the list. Fair enough. It makes for a big number. But for anyone actually running a building business, the dollar figure is the least useful part of the data.

What matters is the speed. And on speed, one Australian city now leads the world.

A Compare the Market study comparing construction costs across 67 cities worldwide found Townsville is now the fastest-rising construction market on the planet. Costs there climbed 6 per cent over the year to May 2026, the steepest increase of any city measured, ahead of Honolulu and Johannesburg, which tied for second at 5.6 per cent.

For a regional city of around 200,000 people, that is a striking result. Townsville is not just leading Australia. It is leading the world on how fast the cost of building is moving. Perth follows on the domestic side, and the broader pattern is clear: Australian cities cluster heavily through the upper part of the global growth table, even though none of them sit near the top for outright cost.

Here are the five fastest-rising construction markets in the world on the current data.

Source: Compare the Market, Building and Construction Costs 2026. Tender Price Index movement, year to May 2026.

Why speed beats price as the number that matters

Here is the distinction most of the coverage misses, and it is the one builders should care about most.

On absolute cost, Australia sits mid-pack at best. The expensive end of the global table belongs elsewhere. Hong Kong tops it at around AU$8,880 per square metre, with United States cities like Honolulu and Portland well above anything seen here. Australian cities land lower, between roughly AU$2,200 and AU$3,300 per square metre. On that measure, we look unremarkable.

On the rate of change, we lead the world. And a fast-moving cost is a harder problem to run a business around than a high one.

Think about why. A high cost that sits still is a known quantity. You can price it, quote it, and build your margin on top of it, because the number you quote today is close to the number you pay in six months. A builder in a stable high-cost market knows exactly what they are dealing with.

A cost that is climbing 6 per cent a year is a moving target. The price you quote at contract signing is not the price you pay when the materials land or the trades turn up. Every month between quote and completion, the ground shifts. In a market moving that fast, the gap between what you priced and what you pay is where margins quietly disappear.

A high cost that sits still is a known quantity. A cost climbing 6 per cent a year is a moving target, and moving targets are what put builders out of business.

That is why this ranking should land differently for a builder than it does for a casual reader. Being expensive is a pricing exercise. Being fast is a risk-management problem, and it is the harder of the two to solve.

Townsville tops the country on cost too

The speed is the real story, but Townsville is not cheap in absolute terms either. On cost per square metre, it also leads the nation, which is unusual for a regional city sitting above every capital.

Source: Compare the Market, Building and Construction Costs 2026. Average residential construction cost per square metre, converted to AUD.

Perth and Brisbane follow, and the capitals most builders would assume to be dearest, Sydney and Melbourne, sit lower down. Canberra is the cheapest capital to build in on this measure. The takeaway is that the old mental map of expensive-south, cheap-north no longer holds. The cost pressure has moved, and it has concentrated in the north of Queensland.

It is not a one-year spike. The forecast holds high

If the ranking were a single hot year, you could file it and move on. It is not. The independent forecasting on where construction costs are heading says the pressure holds, and in the worst-affected markets, it climbs further.

Rider Levett Bucknall, one of the country’s established construction cost consultancies, publishes a Tender Price Index forecast by city. The Tender Price Index, or TPI, measures the average movement in tendered construction costs over time. It tracks how fast prices are changing, not the absolute cost of a build.

RLB’s most recent read, as at the fourth quarter of 2025, does not show costs easing back to normal. It shows them staying elevated across the board and pushing higher in the same markets already topping the global table.

Source: Rider Levett Bucknall, Australia Market Intelligence Update, annual TPI uplifts as at Q4 2025. Sorted by 2026 forecast.

Read down the 2027 column. The Gold Coast is forecast to hit 7.5 per cent, with Brisbane and Townsville at 7 per cent, and all three are projected to hold near that level through to 2029. That is not a spike that corrects. That is sustained escalation baked into the pipeline for years, and it lines up with what the global ranking is already showing.

What is driving it

The costs are not climbing by accident. A few forces are stacking on top of each other, and they are structural rather than seasonal.

Labour is the constant. Skilled worker shortages have not resolved, and the workers who left the industry through the downturn have not all come back. When there are not enough trades to go around, the price of the ones available goes up.

Materials add another layer. Tariffs on imported steel have lifted input costs on one of the most fundamental parts of a build, and those increases flow straight through to the quotes builders are writing now. When a core material gets more expensive at the same time as labour, the two compound.

A wall of public work is competing for the same trades and materials. Housing targets, energy projects and major infrastructure all draw on the same finite pool as residential builders. When public megaprojects and private builders chase the same subcontractors, the private builder usually pays more to compete.

Queensland carries an extra layer on top of all of that. Defence-driven demand in the north, limited competition among the larger contractors, repeated weather events pulling trades into repair work, and Olympic-related construction expected to intensify cost growth in Brisbane, the Gold Coast and Townsville over coming years. That combination is why Townsville sits at the top of both the global ranking and the domestic forecast.

None of these are things a single builder can switch off. Which is exactly why the response has to be about what you can control.

What builders can actually do about it

You cannot change the labour market, tariffs or the infrastructure pipeline. What you can change is how exposed your business is to a cost base that keeps moving. That starts with fixed-price contracts, which are where builders get caught hardest in a rising market.

A fixed price with no rise-and-fall provision hands the entire risk of cost movement to the builder. If steel, timber or trades jump between signing and completion, you wear the difference. In a market forecast to keep climbing, that is a structural bet against yourself. The tighter the market, the shorter the window a quote should stay valid, and the stronger the case for cost escalation clauses on any job with a long program.

The second lever is the timing of money. When input costs are rising, every delay costs real dollars, not just time. Builders who issue progress claims the moment a stage is complete, price and sign variations before work starts, and keep clean documentation on every change are the ones who tighten cash flow enough to absorb a moving cost base. Discipline that feels optional in a stable market becomes survival in a fast one, because the cost of getting it wrong compounds faster.

There is also a window worth acting on. RLB notes that in some regions, well-prepared projects have a brief opportunity to move quickly to tender and lock in resources before capacity tightens again, most clearly in south-east Queensland. For builders with work ready to go, moving early can mean securing trades and pricing before the next lift lands.

The Good Builder Take

Townsville topping a global cost table sounds like a headline built for clicks. It is not. The number holds up against independent forecasting, and the drivers behind it are structural, not seasonal.

For builders, the takeaway is not the ranking. It is the speed. A fast-rising cost base punishes loose quoting, long-dated fixed prices and thin cash-flow discipline harder than a high-but-stable one ever would.

Price the market you are in, not the one you were in last year. In a market moving this fast, a quote that sat too long is a loss you have not noticed yet.

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Last updated: July 2026

General information only. This article covers industry conditions and does not constitute financial, legal or insurance advice. Builders should confirm current figures and seek professional advice for their specific circumstances.

Author: TGB Editorial