New Report from OpenLot.com.au Has House
Build Cost Data and Insights by State
MELBOURNE (10 September 2024) — Australians are spending as much as 57% more to construct their new houses than before the Covid pandemic. The most expensive new houses are being constructed in Victoria, while the least expensive are in Queensland. That's according to a new report released today by OpenLot.com.au, the consumer portal for new housing.
This report is based on OpenLot.com.au’s analysis of five years of new house construction data from the Australian Bureau of Statistics. The data does not include terraces, townhouses, apartments, or other types of dwellings and excludes the price of land.
"Homeowners aren't just victims of higher prices,” said Qi Chen, CEO and founder of OpenLot.com.au. “They are also proactively choosing to spend more. Part of the increase comes from materials and labour cost inflation, and the rest from people being willing to spend more on construction due to the home price boom of the past few years. When house prices go up in a suburb, people are willing to spend more to build a new house there.
"Australians tend to spend up to about the average house value in their suburb when they build a new home. On average, Australians typically spend 40%-50% of their total property price on the building costs for a single-storey home and 50%-60% for two-storey homes.”
Which State Had the Biggest Increase?
Qi added, "We looked at the five largest Australian states. Queensland shows the biggest increase in new house construction costs between the 2019-2020 and 2023-2024 financial years. Queenslanders are spending 57% more on average to build a new house than they were five years ago.
"After Queensland, New South Wales had the second biggest increase in construction cost, at 46%. Western Australia and South Australia have relatively similar increases, at 42% and 43% respectively.
"Victoria had the smallest increase, with a lower yet still very significant 38% increase.
"Looking back at the data for the past five years, you see virtually no increase in costs until 2022. Both in 2022 and 2023, the construction cost of new houses in every one of the five largest states increased by double digits.”
2024 Is a Year of Moderation
Qi said, "Compared to 2022 and 2023, construction cost growth looks relatively moderate this year. Construction cost increases dropped back down to the single digits and as low as 6%, even though the rate of increase remains more than double the 2021 growth rate in most cases.
"We know from other data sources that construction material inflation and the rate of home price growth have also declined. We expect these factors to further restrain new house construction costs in the current financial year.”
Where You Can Build a New House for the Least, or the Most
Qi explained, “There is an immense spread in house build costs between the most expensive and least expensive locations in each state. Across Australia as a whole, the range is even greater. Australia’s most expensive average new house build cost is in Point Nepean, Victoria. Point Nepean’s $1,219,221 is more than five times more than the $230,661 average build cost in Australia’s least expensive location, Southern Moreton Bay Islands, in Queensland.”
Regional Premium: Build Costs Increased Faster in Some Regional Areas than Capital Cities
Qi said, “In both Queensland and Western Australia, we see what we call a 'regional premium.' In both states, consumers outside of the capital city spend more to build their homes than are people in the capital city of the same state. At the same time, the spending has also been increasing more quickly than in the capital cities.
* PP = "percentage points"
“Queensland has Australia's biggest regional premium. The average new house build cost in Greater Brisbane is more than $73,000 less than in the rest of the state. And build costs in regional Queensland have increased at almost twice the rate as in Brisbane in 2023-2024 compared to the prior year. Build costs in regional Queensland increased by a dramatic 10.4% this year, compared to 5.7% in Greater Brisbane.
“Western Australia has a significant regional premium. The average build cost of a new house in Greater Perth is more than $30,000 cheaper than in the rest of the state. And build costs in regional WA have increased by 7.6 percentage points more quickly than in Greater Perth in 2023-2024 compared to the prior year. Build costs in regional Western Australia increased by a shocking 13.6%, compared to just 6% in Greater Perth.”
About the Data
This report is based on analysis of data from The Australian Bureau of Statistics. It tracks new house construction, both knockdown-rebuilds and completely new construction. The data does not include terraces, townhouses, apartments, or other types of dwellings.
About OpenLot.com.au
OpenLot.com.au is the consumer portal for new housing, including land, house and land, and townhouses. Visit OpenLot.com.au for more information.
