The cost of building a house in 2023

It’s well known that the cost of both buying and building a house in Australia has suffered a dramatic increase over the past few years. An increase in demand has made finding permanent housing extremely difficult for many Australians, whether they’re in the rental or home ownership markets. Many people are considering whether now is the right time to enter the property market as homeowners, and want to know more about the cost of building. In this article, we’ll examine some of the reasons behind the increased housing prices along with some of the factors that will influence the cost of building.  

What caused the dramatic rise in housing costs?

The surge in housing prices can be largely attributed to the pandemic. When compared to other, more populated Australian cities that were forced to lockdown for extensive periods of time, it’s safe to say that WA was not impacted as harshly by COVID-19 and was shielded from some of the consequences of lengthy lockdowns. However, WA border closures caused an overwhelming demand for housing by restricting people’s movements, even, for certain periods, within WA itself.

The introduction of lockdowns and restrictions were rapidly imposed in many countries, resulting in unpredictable exchange rates and a disruption in production and supply chains. This was later amplified by global conflicts, including the Russia-Ukraine war. The shortage of construction materials and delays both increased the costs of construction and created a demand for existing homes in Australia. Further, both State and Federal border closures resulted in labour shortages across many industries, including construction. Sadly, various Australian building companies have collapsed over the past few years, unable to manage the significant increase in interest rates coupled with the shortages of both construction materials and labour. Further, there are significantly less properties being listed on the market due to the difficulties associated with renting, buying and building. A person who is interested in building a new home may choose not to do so in fear that they may not find a rental property to live in whilst their new home under construction.

So, what determines the current cost of building in WA?

Unfortunately, calculating the cost of building a house in today’s market is easier said than done. In addition to the complications mentioned above, there are still many factors at play when it comes to calculating the overall cost of a build. In good news, the cost of materials has steadied and for certain materials, costs have even begun to decrease. However, it is acknowledged that despite border openings, labour shortages continue to be an issue within the construction industry.

In general terms, there are factors that will impact the cost of building your home in any economic landscape, including:

1. The nature of the land

Before purchasing a block of land, it’s wise to consult with the relevant experts to ensure that you’re aware of any issues or complications that may arise during the construction phase. For example, it’s important to consult an engineer or registered builder to identify the need for any supporting structures or retaining walls. You should also arrange for a soil test to determine the land’s suitability for building. After all, it would be incredibly disappointing to purchase a block of land only to find out that the soil cannot take the weight of your dream home.

2. The size of your land & home

The price of your block will depend on its location. For example, you may pay the same amount for an inner-city block as you would for a much larger rural block. Irrespective of the land’s location, the amount required to build your home will be influenced by the size of your home. Put simply, a four-bedroom home will cost more than a two-bedroom home, so it’s important to be clear on the amount of space you need before choosing a block and house design.

3. The quality of materials

It might seem obvious, but the higher the quality of materials and furnishings you choose, the more expensive they’ll be. It’s important to be clear on your budget so that you know what you can afford before you begin making design choices and ordering materials. Ideally, you’ll find a balance between something affordable and something durable that will not need replacing or repairing after only a short time.

4. Off the plan vs. a customised home

If you have the means to engage a licensed building designer or architect to design your home, then you will have more control over its design. However, many first homeowners buy a project home “off the plan”, meaning they select a standardised home offered by a builder. If you choose this option, you will not be able to make extensive changes to your chosen plan. However, buying “off the plan” is more affordable as you avoid the fees associated with drafting a customised plan.

Summary

As you can see, there are many factors that can impact the cost of building a new home, ranging from the quality of tile you’ve chosen to existing global conflicts that may impact economies and supply chains. Overall, it’s expected that cost increases will slow in the coming years, meaning it should become more affordable to build in WA. If you’re thinking about building and would like to know more about your options, reach out to the Mr Enthusiast team now.