MILDURA'S building commencements have not decreased despite increases to construction costs.

CoreLogic's online construction database, Cordell Connect, reported that residential construction costs had increased 10 per cent over the past 12 months, the highest annual growth rate on record outside of the introduction of the GST in 2000.

The rise has been attributed to the escalating cost of supplies, and costs to suppliers, and is affecting the number of building commencements nationally.

It was reported last week by the Australia Bureau of Statistics that total dwelling unit commencements had fallen 6.5 per cent nationwide, and the value of total building work had dropped by 0.5 per cent.

Col Gowers Homes managing director Jason Gowers said, however, that he had not seen the price increase have an effect on the number of Mildura people choosing to build.

He said the region's interest in building had been high, as many were trying to start building before prices rose further.

"The cost of construction has definitely increased, but I think most people are thinking 'the best time to build was 12 months ago the second best time is now'."

He also thought the local housing shortage and housing market increases were driving people to build as well.

"There is still a bit of a housing shortage locally," he said.

"And when people look at what is for sale and the prices of those homes, building, even though there have been price rises, is still a cheaper alternative for most."

Mr Gowers said the rising costs had affected the entire construction industry but "our industry is still going strong".

"Any increases in prices makes it hard for builders, because we sign a fixed price contract and anything that changes during the build must be managed by the builder," he said.

"(Col Gowers Homes) go above and beyond to procure materials to ensure we can hold prices for our clients.

"We spend a lot of time in selections, locking in the clients' choices so we can order and secure cheaper pricing for our clients, but it is definitely challenging times."

Cordwell predicted that construction costs would remain high for some time, but Mr Gowers said he hoped prices would begin to steady.

"With everything that is happening in the world, I think it is unlikely that prices will fall, but I am quietly optimistic that prices will stabilise soon," he said.

Ray White managing director and sales agent Damian Portaro said while he had noticed a slight decrease in the amount of vacant land being purchased locally, there hadn't been a "big shift" in the market.

Mr Portaro said that he believed purchases had decreased only slightly due to the lack of sub divisions hitting the market, and that land sales would increase as more came available.

"There haven't been as many sub divisions hit the market, but there are a few that are about to come on," he said.

"There are a lot of subdivision to be released in the next 12 months."

Mr Portaro said he was aware that some people were hesitant to build due to price rises, but said Mildura had a "healthy land appetite".

CoreLogic's construction cost estimation manager John Bennett said the increase in construction costs was due to the rising cost within the industry.

"Suppliers are frequently mentioning the impact of rising fuel, freight and electricity costs on their bottom line and these are significant additional challenges being face by the industry," he said.

"It is important to note these factors only add to other pressures that have impacted the residential construction industry for 18 months now, such as labour availability and overheads.

"A shortage of labour and materials means a delay in completion times, which leaves builders vulnerable to market changes and holding costs."