FIERCE competition in the construction industry should cause building costs to plateau or even fall, a leading industry figure believes. 

David Mitchell, managing director quantity surveyors Mitchell Brandtman said global economic decline would make contracts harder to come by for builders.

"Sentiment in the market is quite pessimistic at the moment and that is having an effect on construction costs,'' he told The Cairns Post.

"(Builders) are concerned about what level of work they are going to have next year and it's making them think harder about their prices. It means higher competition," he said.

Mr Mitchell said the costs of house building would stop going up, but how much they stabilised depended on the how the economy performed.

"The construction industry has drawn a lot of workers to it and those workers need work so competition will increase,'' he said.

Mr Mitchell said construction costs rose about 10 per cent annually in recent years, but in 2008 it was likely to be five.

"There will be increases in material prices but I think competition levels will overpower those,'' he said.

Mr Mitchell said there it could be a good time to build a house.

"It's when I would build and with first home owners opportunities, with the rebates and things like that, it's a good time I think,'' he said.

"It is going to take a bit of time to really hit the market... there might be a little more settlement that needs to occur, but next year would be a good time I reckon."

Although prices might be keener, Mr Mitchell warned there could be issues.

"When people are working for less money, there tends to be more problems, so the job isn't done until it's totally finished,'' he said.

"Things could go a bit slower, you could get delays.''

Mr Mitchell was speaking at Sofitel Hotel in Cairns at a lunch organised by the Urban Development Institute of Australia.

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