The Cost to Build a House in Australia

If you have dreams of building your own house, it’s important that you know how much money you’ll have to borrow or save before you start building. While calculating the exact costs can be difficult, increasing costs related to building materials, supply chain disruptions and labour shortages have made it much more difficult to figure out the overall cost to build a house in a post-pandemic Australia.

Before you start building you’ll need to apply for approval from your local government or a building certifier. Building certifiers manage the building approval and inspection process and must be properly licenced in your state. Keep in mind that if you start building without a permit, then you may be fined. 

Since peaking in March 2021, the number of building approvals has drastically decreased [1]. This may be a result of the HomeBuilder scheme ending, increasing fixed-term mortgage rates, affordability challenges as well as further challenges in the construction industry.

In 2022 the final cost for a newly built house will be strongly influenced by the size of the build. In Australia the average home is 200 square metres but newer builds may start at as large as 240 square metres [2]. With a larger home also comes more materials, labour demands and a longer building timeline and all of these elements contribute to the overall cost to build a house.  

In Australia, building costs are normally calculated by multiplying the total floor area (m2) by the cost estimate ($ per m2) provided by the building contractor. And whether you use a timber finish or build a house out of bricks, the price of your materials will greatly impact the final price. As of 2022, construction costs have risen in line with supply chain shortages and an increased demand for building materials. 

The cost of timber, board and joinery rose by 7% in 2022’s first quarter due to timber window installations and other metal products rose by 3.9% because of aluminium windows and doors [3]. With this information, we can assume that supply constraints on timber and metals have contributed to the 3.8% decrease in the total construction done in Q1 [4].   

In 2022, the average time for the construction of a house has risen from 8.3 months pre-COVID-19 to 12.2 months in March this year [5]. And with Australia in the biggest labour shortage in decades, this has led to long building delays and a need for more bricklayers, carpenters, roofers and tilers specifically. 

Using CoreLogic’s Hedonic Home Value Index from July 2022 we can estimate the median dwelling value nationally, regionally and per each capital city in Australia. Keep in mind this information is based on index results as of 30 June 2022.

According to CoreLogic housing value growth has continued to decrease since its peak in March of 2021. Recent surges in inflation and a rapidly rising cash rate have further influenced decreasing housing value growth in every capital city and regional market in the 3 months from March to June 2022[6].

CoreLogic has predicted that over time the housing market will slowly return to being in favour of buyers. Even over the past month dwelling values have continued to trend downwards with dwelling values in Melbourne decreasing by 1.1% and Sydney decreasing by 1.6%. [6]