Build now or wait for construction costs to drop? A decision guide for shed, warehouse and fit-out jobs

You need a bigger shed, a second warehouse bay or a proper fit-out. The quote is solid, the number is large, and every industry headline says costs are climbing. So you wonder: if I hold off, might the price come down? It’s a fair question. The honest answer is that it probably won’t, and that the price of the building is only half of the sum.

Should I wait for construction costs to come down?

On the evidence, waiting for a fall is a poor bet. WT Partnership’s June 2026 market conditions report says escalation is forecast to remain above 5% nationally, and that costs are expected to stay elevated over the next three years even before any direct impact from the Middle East conflict is counted.

Escalation means prices keep rising, just at different speeds. A forecast of 5% doesn’t mean costs fall back; it means next year’s job costs about 5% more than this year’s, all else equal.

The Australian Bureau of Statistics shows the same drift. In its June 2026 Producer Price Indexes release, building construction output prices rose 4.9% over the year. Forecasts can be wrong and markets do soften, so don’t treat any of this as certain. But a plan that depends on prices dropping is a plan that depends on the opposite of what forecasters expect.

Does it matter where my project is?

A lot. Escalation isn’t one national number.

• Brisbane and South East Queensland: WT forecasts business-as-usual building escalation of 6.5% in 2026, rising to 10% by 2028, with the 2032 Olympic and Paralympic works pipeline tightening trade capacity.
• Sydney and Melbourne: Rider Levett Bucknall describes these markets as more competitive, which tends to mean steadier pricing and more room to negotiate.
• Perth: WT forecasts 6.7% building escalation in 2026, so don’t assume the west is quiet.

Treat these as a guide to direction, not a quote. Your builder’s pricing for your job, on your site, with your trades, is the number that matters. But if you’re in a fast-escalating market, every month of delay is more expensive than the national headline suggests.

What is the real comparison?

Forget “is it cheaper later?” and run a dollars-against-dollars test. Add up what waiting costs, then set it against what borrowing costs.

The cost of waiting, for one year:

1. Build price rise: the quote multiplied by the escalation you expect for your location.
2. Profit you don’t earn: extra margin the new space would have produced, from more throughput, more stock, more jobs accepted or a second revenue stream.
3. Making-do costs: off-site storage, double handling, overtime, or leasing space you wouldn’t need once you’d built.
4. One-off losses: a lost contract or customer you couldn’t service in the meantime.

The cost of borrowing: the total dollar cost of finance over the term, as quoted by the lender. Not a percentage, a dollar figure for the whole loan.

If the first list is larger than the second, building now wins on the numbers. Our cost of waiting calculator uses the same four parts, and the guide on putting a dollar figure on delay explains each one.

What does this look like with real-sized numbers?

This is an illustrative example with invented figures, not a real business.

A small manufacturer needs a $400,000 workshop extension. Its builder expects the price to rise about 6% over twelve months.

Item	Dollars
Build price rise from waiting 12 months (6% of $400,000)	$24,000
Profit forgone: extra orders the workshop can’t take on (about $4,000 a month)	$48,000
Making-do costs: off-site storage and double handling	$9,000
Total cost of waiting	$81,000
Total dollar cost of finance over the term (as quoted)	$70,000

Here, waiting costs more than borrowing, and the margin is about $11,000. That’s a decent signal to go, but not an overwhelming one. Change one input, say the extra orders being $2,000 a month instead of $4,000, and the cost of waiting falls to $57,000, below the finance cost. The answer is only as good as the evidence for the profit line.

That’s why the second half of the decision matters as much as the first.

When does waiting win?

Waiting is the right call more often than building guides admit. Hold off if:

• The design isn’t finished. Rushing to build before the plans, engineering and approvals are settled invites variations, and variations cost more than a year of escalation.
• Demand for the space is a guess. If the profit line in the table above is hope rather than evidence, such as signed orders, a waitlist or turned-away work, the maths isn’t telling you anything.
• The repayments would squeeze your cash flow. Check them against your slowest months, not your average. The guide on when waiting is smarter lists the warning signs.
• The quote is padded for uncertainty. Builders add contingencies when the design is vague. Firmer scope can lower the number more than waiting would.
• There’s a cheaper way to get the capacity. A short lease, a smaller extension or a better layout may deliver most of the benefit.

Waiting isn’t failure. Building the wrong thing sooner is dearer than building the right thing later.

Can I stage the build instead?

Often, and it’s the option owners overlook. The aim is to spend where price rises bite and defer where they don’t.

1. Lock in the long-lead and structural items first: slab, frame, services, roofing. These are the parts most exposed to materials and trades pricing.
2. Defer finishes and add-ons: internal fit-out, mezzanines, offices, extra bays.
3. Ask the builder which line items are most price-sensitive, and whether they’ll hold a price on the first stage.

A staged plan trims the amount you borrow, cuts the cost of finance and still captures much of the saving from moving early. Our guide on expanding now or waiting a year covers the wider growth question.

What about weather and the building calendar?

Build timing isn’t just about price. Wet seasons, harvest windows and trades availability affect when work can physically start. A signed contract in November doesn’t mean a slab poured in November. Our page on weather windows shows how to work back from the season you need the space ready for, and the guide on working back from your deadline gives the document and lender sequence.

If the build has to be finished before a busy season, start the finance conversation before you sign with the builder, not after.

How does the tax side change the timing?

Less than most owners hope. The instant asset write-off is for depreciating assets such as machinery and vehicles, not the building itself. The ATO’s capital works rules treat construction costs as capital works, deducted gradually over many years from when construction is complete. Fit-out items such as equipment can fall under different rules, so ask your accountant how your project splits.

The practical point: don’t rush a build to hit 30 June. The deduction doesn’t work like a write-off, and a deadline-driven build is a poor reason to commit. Our piece on buying just to save tax explains why.

What do lenders want to see for a build?

Expect to show the quote or contract, the plans and approvals, evidence the business can service repayments and, for larger projects, security over property. business.gov.au lists the usual documents. Having these ready shortens the timeline, which matters when the builder’s price is only held for a set period.

Ready to see where you stand?

Build costs are one of the few things in business you can see coming. If your numbers say that waiting costs more than borrowing, the next step is simple: find out what you’d actually be offered, so you can compare it with the cost of waiting in real dollars.

Check your options with Loans Now → takes about 60 seconds and there’s no credit check when you enquire, so asking won’t touch your credit file. We don’t send your details to a pile of lenders. A real person looks at your situation and calls you to talk it through, and if the answer is “not yet”, we’ll say so. Please fill the form in accurately, because it means the first option we put in front of you is the right one.

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