How Much Does It Cost to Build a House in 2022?

• New houses are being built on smaller blocks, ABS data shows
• The average floor area, however, has largely remained unchanged
• Allura Homes, however, notes larger homes are becoming more popular, in order to accommodate additional family members

As we have reported on The Property Tribune, the cost of building has increased dramatically thanks to supply chain disruptions and labour shortages.

Demand over the past few years has been fuelled by low interest rates as well as federal and state government stimulus that wound up last year.

Overseas, the demand has skyrocketed for new housing and construction too, such as the United States and Canada.

This has led to a decrease in dwelling approvals. Australian Bureau of Statistics (ABS) data showed that approvals for private sector homes fell by 3.9% in March.

ABS data shows that new houses are being built on significantly small blocks, with the average site decreasing by 13% – or 64 sqm – over the last ten years.

However, the average floor area has remained largely unchanged overall, although the average floor area of house approvals has been volatile over the past ten years.

Notably, it is below the peak of 248 sqm in 2018 – at 242 sqm, perhaps as more Australians are seeking larger outdoor and garden spaces.

In light of this, how much does it cost to build a house in Australia in 2022?

There are many factors to consider, and ways to calculate this.

How much does it cost to build a house?

Many factors need to be taken into account when discussing how much it costs to build a house.

Arguably the most accurate data surrounding the average cost of building a home comes from the ABS.

Released back in 2019, this table shows the average cost of building a new home in each state and territory. ACT, by far, was the most expensive, with South Australia being the cheapest.

How much does it cost to build a house per sqm?

In terms of the average building cost per square, online marketplace Oneflare estimates it can vary from $620per square metre to $4,000 per sqm depending on the complexity, location, materials and labour used.

Labourer costs can vary from $30 per hour to more than $55 per hour. More specialised tradespeople, such as electricians, can vary from $80 to $130 per hour.

ABS data from 2019 suggests the price of an average-sized house can range from $271,000 to $1,124,550.

Depending on the level of finish, quantity surveyors BMT Tax Depreciation says a typical single-storey three-bedroom full brick home on a level block featuring a shelf design can cost from $1,550 per sqm for a low finish to $2,146 per sqm for a high finish in Sydney, with a similar cost in Melbourne.

A three-bedroom weatherboard project home, on a single level and featuring a shelf design can vary from $1,460 per sqm to $2,022 per sqm.

An architecturally designed executive residence can vary from $3,341 per sqm to $5,982 per sqm.

There can be a variation between either 8% lower to 35% higher for the remaining cities.

How much does it cost to rebuild a home?

In light of HomeBuilder and a lack of land supply across many housing markets, many Australians have decided to either rebuild their home or seek out an established property with the intent of rebuilding.

While this allows you to build your dream home in an area you desire or are accustomed too, there are a range of factors to consider.

For example, you still need to gain approval form your local council. Demolishing a home will also need your lenders consent.

It can be costly surveying land for obstructions such as trees and roots, as well as disconnecting trees and roots. Removing these, along with pipes and especially asbestos can quickly eat up a rebuilding budget.

The LMI Group offers guides on the demolition of a range of assets in Australia – including residential property – across most capital cities. It has found that framed property is cheaper to demolish then brick properties.

Cost of demolishing a property per sqm

Source: LMI Group

Other factors can include how accessible the house is for the machinery – larger houses on smaller land increase the trickiness of a knock down.

Additionally, the heaviness of the materials demolished can influence the cost of the knock down. For example, transporting brick is far heavier than timber.

However, do remember that valuable materials can be sold or reused such as tiles.

Housing trends in 2022, a builders perspective

Andrew Strachan, the director of Allura Homes, an award-winning Sydney-based knock down rebuild specialist, spoke to The Property Tribune about the trends they have noticed in their markets.

He noted that trends in the knockdown rebuild and custom home markets are driven by peoples budget.

“However, there is a growing trend for bigger homes as people look to accommodate older or additional family members,” said Mr Strachan.

“One in every five Allura Homes customers request additional rooms to be included in their home design to accommodate a parent moving in or visiting for extended periods.”

Mr Strachan also provided the key factors buyers need to consider when building a home.

Five crucial things to think about when building a home

1. Building orientation, so the house captures sunlight
2. The size of the home. This includes the number of bedrooms and living spaces to ensure everyone is comfortable, particularly for families with teenagers or university aged children.
3. A large enough garage to park the family cars as well as store items like bikes, gardening tools, sport, camping and fishing equipment.
4. Enough interior storage for important but less used items like suitcases and Christmas decorations.
5. An indoor/outdoor alfresco area. Australians enjoy entertaining and it’s nice to have a suitable space for this.

Greatest challenges in building a home

In terms of challenges faced by builders and buyers alike, Mr Strachan noted their company wants its customers to understand the total cost of the project – not just the cost of building the house.

“Customers start their journey wisely, with a budget in mind, however they may not have all the details regarding the costs associated with building a new home,” he said.

“These costs include council fees, the demolition, pool installation and landscaping, as well as the internal materials like curtains, carpet, light fittings. It may even need to cover traffic control if the block is on a main road.”

He noted that if the build is planned well, the budget can go further.

“For example, it is more cost effective to build the pool and retaining walls first while it’s still easy to access to the rear of the block.

“Not everyone has an open cheque book, so understanding each part of the total budget, including the cost of building the home, will greatly minimise any surprises and enable the project to be finished on time and on budget.”

A quantity surveyors’ perspective

Aside from land, Marty Sadlier, director at MCG Quantity Surveyors, also had five major factors to consider when building a new home.

1.  Understand the implications of the homes purpose

“Is the property an investment or potential place of residence? Depending on the purpose and your intentions, you will approach the design and execution differently,” he said.

“You may choose to overcapitalisation on your home if there is a feature you really want.”

“How bespoke will the property be and will its level of uniqueness be a detriment when it comes time to sell? You want multiple buyers fighting over it.”

2.  Do a proper due diligence on your design

“A joint study between both Griffith & Deakin Universities showed around 40 to 50 per cent of all building defects could have been eliminated in the planning stage.”

“Spend as much time and effort on the deign as you can to eliminate as many variables as possible. Don’t be scared of spending money in the design phase.”

3.  Understand what most important to you in Time vs Cost vs Quality

“Will you be willing to incur more cost is if you must have the job completed by a certain time? Do you have a fixed budget but are able to be more flexible on time? Knowing this early means you know where to flex if needs be down the track.”

4.  Choose a builder who will give you their full  attention

“When choosing a builder check how many jobs they do a year, and how many they have on at the present time.”

You want their full attention. You don’t want them having so many jobs on the go that yours gets forgotten. Worse still is that some of the trade expected to work on your job get redeployed to another “more urgent” build.

5.  Commission a Resource Loaded Program

Few people get a resource loaded program, but they are invaluable, he said.

“This is where the progress of the build doesn’t just schedule when work is going to get down, but also what level of resources will be devoted to each task.

“For example, it doesn’t just say tiling will be done at a certain date and for a stated price. A resource loaded program also tells you exactly what materials and their quantities are needed. It also sets out how many labourers need to be there to complete the job.

“A resource loaded program can be completed for a very reasonable fee. It helps you and the builder quickly identify potential problem spots in the build, and plan appropriately for them.”

Mr Sadlier also noted that thanks to local government town planning guidelines, this feeds varying cost differences even within the same state.

“Once you cross states borders, these variations only get wider,” he added.

“Then there’s weather that can have an impact. Cyclone areas will require tie downs in the construction which adds to the cost for example.

“Also, you may need to use stainless steel rather than galvanised ties to avoid rust problems.

“Isolation also plays a part. If it takes longer and costs more to transport materials and labour to an isolated location.”

In terms of government stimulus, Mr Sadlier noted it had an “detrimental” effect on supply and demand.

“When HomeBuilder came in for example, it stimulated the sector to the point where you now can’t get a builder. They’re now booked out until mid-2023,” he noted.

“There also now not enough material to build all the jobs that have been approved.

“We will be dealing with the flow-on effects of government stimulus for a long time yet.”