It’s a seemingly simple question with a complicated answer: how much does it cost to build a house in Australia?
While the latest data available reveals that on paper the average house costs about $320,000 to build in 2021, the “real world” figure depends on a number of factors.
From where the house is located, to the size and cost of the block its built on, to the finishes selected and even the impact of Covid, there’s lots to consider. Let’s break it down.
How COVID-19 has impacted costs when building a house
While it’s hard to be clear exactly how much COVID-19 has impacted costs when building a house, it’s fair to say that with so many changes, border closures and restrictions it has changed the landscape.
Thanks to volatile exchange rates, supply chains being impacted (and therefore not as reliable) and reduced productivity due to COVID-19 restrictions, in some cases it has taken longer to see projects complete and therefore a rise in construction costs could be evident.
COVID-19 construction and renovation subsidies
In the 2020/21 financial year, the federal and state governments have provided many schemes to help home buyers and to encourage people to build and buy amid the COVID-19 pandemic.
1. Stamp duty fees discounts
While some state government offered hefty land tax concessions in a bid to stimulate the economy, most of these COVID-driven discounts are coming to an end soon.
- New South Wales: Under the First Home Owner Assistance Scheme, new homebuyers are eligible for tax duty exemptions for properties valued between $650,000 and $800,000 and vacant land priced between $350,000 to $400,000. However, the scheme expires on 31 July, 2021.
- Victoria: The government is offering stamp duty waivers on homes worth up to $1 million. Homebuyers will save 50% in stamp duty – worth up to $27,500 (on a $1 million property) – for new builds and 25% – worth up to $13,750 – when purchasing existing residential properties. This scheme is also coming to an end, with contracts needing to be signed off by 1 July, 2021.
- ACT: The ACT government’s stamp duty concessions also wind up on 30 June, 2021. Under the incentives, eligible owner-occupiers of new homes, enjoy no stamp duty on single residential dwelling blocks and no stamp duty on off-the-plan unit (unit-titled apartment and townhouses) purchases up to $500,000. There is also an $11,400 stamp duty reduction for off-the-plan unit (unit-titled apartment and townhouses) purchases between $500,000 and $750,000.
- Western Australia: There’s no stamp duty relief for West Australians but there is an “off the plan duty rebate” for those buying into apartment complexes. Find out more here.
- South Australia: South Australia’s land tax relief came to an end in April, 2021. Under the scheme, eligible non-residential and residential landlords and eligible commercial owner-occupiers received tax relief between up to 50% of the 2019-20 land tax liability.
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- Tasmania: If you’re experiencing financial hardship paying land tax, you can apply for a payment arrangement. A land tax exemption is also available for taxpayers who own commercial land as at 1 July, 2020, where they are able to satisfy the Commissioner they were adversely financially impacted during the COVID-19 public health emergency, but you must submit your application by 30 June. Find out more here.
- Northern Territory: Territorians can save up to $18,601 in stamp duty under the home owner discount providing the home or vacant land is less than $650,000. Contracts have to be entered into by 30 June, 2021.
2. HomeBuilder grant
The Australian Government’s HomeBuilder Grant for new builds and significant renovations came to a close on April 14.
But if you’re one of the 121,363 people who applied for a grant, the government has extended the construction state date from six months after contracts were signed to 18 months.
The cost of the land
The first thing to consider when calculating how much it costs to build a house in Australia is the price of the land for the house to sit on, which varies hugely from state to state.
According to The Urban Development Institute of Australia’s 2021 State of the Land report, in 2020, Sydney’s median lot price was $495,000, Melbourne’s was $319,000 and Adelaide’s $183,460.
The average cost of land in Sydney was $1285 per sqm, Melbourne $819 per sqm and Adelaide $400 per sqm.
Average cost of building a home
The cost of building is influenced by many factors, but in early 2020, the Australian Bureau of Statistics (ABS) reported the average is $1393.55 per sqm.
However, this figure doesn’t include design, planning permits, any site works or any cost blow-outs.
According to ABS Buildings Approvals data, the average dwelling in Australia spans 229.8sqm, which puts the cost for the build portion at $320,238.
Wolf Architects director Taras Wolf, on the other hand, said the cost of building an architecturally designed house starts at a minimum $3000 per sqm, right up to $5382 per sqm or $50,000 per Australian house square (9.29sqm).
Wolf said it is difficult, if not impossible, to compare the cost of an architecturally-designed home to one built by a “volume builder for as little as $1600 per sqm.”
“The higher price of architecturally-designed homes is due to the nature of each one being essentially a one-off prototype, because no two clients, site or requirements are ever truly the same. It’s not necessarily related to materials of quality, it has more to do with time,” he said.
While he declined to put an average price on building with a large builder because of the many variables, Hotondo Homes’ general manager of building and operations Nicholas Erbacher said his company’s designs are “architecturally-inspired to deliver a stunning home at a lower cost.”
The company offers more than 90 flexible floor plans, which clients can tailor.
“As a national franchise network, Hotondo Homes’ builders encourage clients to select a design from one of three ranges,” Erbacher said.
Supplier partnerships with brands like Beaumont Tiles, Haymes and Colorbond help achieve this “reasonable pricing.”
Factors affecting building costs
The cost to build a home is influenced by five key factors:
- site considerations
- desired timeframe
Wolf said a larger house with more bedrooms naturally requires more materials, more labour and occasionally more specialised equipment.
“When it comes to build quality, higher-quality materials demand better finishing and craftsmanship, which costs money. The terrain and condition of the land being built on also has a big impact and an architect is best placed to maximise a lot and floor space,” he said.
Erbacher said site costs are an important consideration.
“While many factors can be managed by the client, it is the site costs where control is limited due to a number of site-specific requirements,” he said.
“If you’re in a situation where you need to reduce costs, compromising on the quality of your foundations is not the area, you can always upgrade your doors in the years to come, but you can’t upgrade your concrete slab,” Erbacher said.
“The location of your home can also impact the cost due to council requirements and planning overlays.”
Timeframes also affect what resources are required for a build, Wolf said.
“Architects design to make the absolute most of space, to make it inspiring, so that can mean more complex structures, which can increase the cost too,” Wolf said.
Budget blow-outs are not unheard of either and can generally be attributed to changes made to original plans.
Erbacher said all Hotondo homes include a list of standard inclusions, “however you may choose to upgrade the existing inclusions. If you do, your costs may begin to rise.”
The price of building often doesn’t include optional extras like landscaping, fencing, swimming pools and local council costs, which can also add tens of thousands of dollars.
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