It’s a seemingly simple question with a complicated answer: how much does it cost to build a house in Australia?
In April 2022 the figures from the ABS suggested that, on average, building a home costs around $473,000 (including houses and unit data).
However, the current figure is most likely higher due to ongoing labour shortages. This is also causing building approval rates to fall.
From the location to the size and cost of the block it’s built on, to the finishes selected and even the impact of Covid, there’s a lot to consider when looking at the cost of building a home.
Jump to each section:
- Cost of the land
- Average cost of building a home per square metre
- Average cost of building a home, state-by-state
- 6 factors affecting costs
- How labour shortages are affecting construction in Australia
- COVID-19 construction and renovation subsidies
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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 2022, Sydney’s median lot price was $$543,750, Melbourne’s was $327,475, Perth’s was $215,2000 and Adelaide’s $187,250.
Not only have land prices increased, but the size of the blocks is decreasing according to the ABS.
The average block size of new houses in Australian capital cities has decreased by 13% (64sqm) over the last ten years, from 496sqm in 2012 to 432sqm in 2021.
Average cost of building a home per square metre
While the cost of building is influenced by many factors including location, site, finishes and design you can expect the cost to be between $620 -$3900 per sqm.
However, this figure doesn’t include design, decoration costs – such as painting, planning permits, any site works or any cost blow-outs.
According to this ABS report, the average dwelling in Australia spans 248sqm, which puts the cost for the build portion at $320,238.
There are many factors that make up the price of a home build. Picture: realestate.com.au/buy
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).
Mr 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.
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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 adjust.
“As a national franchise network, Hotondo Homes’ builders encourage clients to select a design from one of three ranges,” Mr Erbacher said.
Supplier partnerships with brands like Beaumont Tiles, Haymes and Colorbond help achieve this “reasonable pricing.”
Average cost of building a home, state-by-state
| State | Price |
| ACT | $440,000 |
| SA | $275,000 |
| Queensland | $289,000 |
| Tasmania | $285,000 |
| NSW | $349,000 |
| Victoria | $327,000 |
| NT | $365,000 |
| WA | $298,000 |
6 Factors affecting building costs
The cost to build a home is influenced by five key factors:
1. Size of home
The average home in Australia is around 195.8sqm according to a report by Commsec, has three bedrooms and sits on around 470sqm of land.
But the size of the average new build was considerably larger – around 235.8sqm – which means Australians are now building the world’s biggest homes.
Mr Wolf said a larger house with more bedrooms naturally requires more materials, more labour and occasionally more specialised equipment.
2. Quality
When building a home it may seem obvious that the basics should be covered, which means you get a safe, comfortable dwelling at the end of the process.
But in reality everyone’s idea of quality can differ so it’s important to come to a good understanding with your builder around the fixtures and finishes.
While it’s true that higher-quality materials mean better finishing and craftsmanship, which increase build costs, the reverse can also be expensive.
By selecting cheaper and lower-quality materials you may find the overall cost is higher as you’ll need to pay for repairs and replacements.
So speak with your builder about a realistic cost for the home you’re after and avoid cutting corners to reduce costs.
3. Site considerations
Mr Wolf said the terrain and condition of the land being built on also has a big impact and, often, an architect is best placed to maximise a lot and floor space.
The quality of finishes will affect the final cost of a home build. Picture: realestate.com.au/buy
The site is the one factor that the builder and/or architect will have to manage – often with the help of an engineer when required – and costs will be outside of the control of the client.
“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,” Mr Erbacher said.
“The location of your home can also impact the cost due to council requirements and planning overlays.”
4. Timeframes
Timeframes also affect what resources are required for a build, Mr Wolf said.
Especially amid supply-chain issues timeframes (and budgets) are being stretched due to shortages in materials across a range of suppliers.
When there’s a delay in material it can cause the whole project to stall, which means the client is paying more in holding and accommodation costs.
Furthermore builder will have to divert his team of tradespeople to start work on other sites, which can mean it’s difficult to get the project aligned again.
5. Complexity of design
It should go without saying that the simpler a project is the cheaper and quicker it is to build; while the more complex designs will cost more and take longer to build.
Budget blow-outs are not unheard of and can generally be attributed to changes made to original plans.
If you’re building with a volume builder it’s generally cheaper to stick with the standard inclusions.
You may choose to upgrade the existing inclusions such as adding more storage, insulation, stone benchtops and luxury flooring, but remember these will increase the initial build costs.
6. Additional expenses outside of building costs
It’s also important to remember that 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.
How labour shortage issues are affecting construction in Australia
COVID-19 changed the landscape for the building profession in a variety of ways, from supply chain and productivity issues to border restrictions, so projects were slower and more expensive on average during the pandemic.
While supply chain issues have largely eased, worker shortages are causing even further delays on projects amid the renovation ‘boom’ caused by Australians spending more time at home due to the global pandemic.
The ABS released their Building Activity Report for the September 2022 quarter on January 18 and it showed a significant drop in the numbers of dwelling commencements (new home builds) of 5.2%.
HIA Senior Economist, Tom Devitt said that supply constraints were holding back the completion of these projects.
“Materials constraints have plagued builders over the last two years, but the shortage of skilled trades is the number one constraint on Australian builders.
Commencements peaked in the previous cycle in mid-2021 and are expected to continue to decline into 2024.
Devitt explained that the number of new homes scheduled for commencement, while declining on the previous year, will keep the building industry busy this year.
“In addition to this, the volume of multi-unit dwellings under construction continues to grow as commencements exceeded completions over the 18 months to September 2022,” he added.
Building costs include factors such as location, size, finishes and design.
COVID-19 construction and renovation subsidies
In the 2020/21 financial year, the federal and state governments provided subsidies to help home buyers and to encourage people to build and buy amid the COVID-19 pandemic but they’ve largely finished up.
HomeBuilder grant
The Morrison Government’s HomeBuilder Grant for new builds and significant renovations came to a close on April 14, 2021.
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.