The cost of building a house in Queensland rose by 2.7 percent during the second quarter.

Based on the Master Builders State housing industry report, the introduction of six-star energy requirements for new homes caused the increase. Master Builders' director of housing policy Paul Bidwell said seventy percent of the cost increase can be attributed to the one-off impact of six-star energy requirements rather than significant increases in labour and/or material costs.

Bidwell explained that “six-star requirements requires the use of additional insulation and other building materials, which adds to the cost of building a new home.”

Without the six-star requirements, however, construction costs rose by just 0.83 percent. According to Bidwell, the figure is “slightly above the general rate of inflation.”

In most regions across Queensland, modest growth in construction costs were noted. Materials contributed around 50 percent of the cost and labour around 30 percent.

The irony is, inspite of the increasing cost of construction, median house prices dropped during the June quarter. Interest rate increases and tighter lending criteria largely caused the fall.

Early this year, Managing Director Shane Goodwin of the Housing Industry Association (HIA) said the costly regulations will not address the lack of supply of new homes and will not help curb greenhouse gas emissions.

Goodwin said, “the likelihood is that an escalation in the cost of new dwellings will push prospective new home buyers back into established dwellings that are far less energy efficient than new dwellings.”