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How much does it cost to build a house in 2020?

Erin Delahunty

Erin Delahunty

4 Dec 2020

It’s a seemingly simple question with a complicated answer: how much does it cost to build a house in Australia?

While industry data reveals that on paper the average house costs about $320,000 to build in 2020, 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, there’s lots to consider. Let’s break it down. 

Building costs include factors such as location, size, finishes and design.

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 HomeBuilder construction and renovation subsidies

In 2020 the Australian 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. HomeBuilder grant

HomeBuilder provides eligible owner-occupiers (including first home buyers) with a grant to build a new home or substantially renovate an existing home.

HomeBuilder assists the residential construction sector by encouraging the commencement of new home builds and renovations.

2. Stamp duty fees discounts

Amid the pandemic some state governments also decided to make temporary changes to stamp duty exemption for first home buyers.

  • New South Wales: From 1 August 2020, the NSW government increased the threshold for stamp duty exemption for first home buyers from $650,000 to $800,000 for newly built homes and from $350,000 to $400,000 for vacant land.  
  • Victoria: The government is offering stamp duty waivers on homes worth up to $1 million bought before 30 June, 2021Home buyers 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.
  • ACT: The ACT Government is offering stamp duty concessions in the ACT for some home buyers planning to live in their new property. These include: No stamp duty on single residential dwelling blocks. No stamp duty on off-the-plan unit (unit-titled apartment and townhouses) purchases up to $500,000. 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: The WA government added a $8.2 million expansion of stamp duty to include concessions for buyers of new apartments.
  • South Australia: Land tax relief is available for eligible non-residential and residential landlords and eligible commercial owner-occupiers in response to COVID-19. The maximum land tax relief available ranges from 25 to 50% of the 2019-20 land tax liability.
  • Tasmania: If you are 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. 
  • Northern Territory: NT’s stamp duty homeowner assistance schemes have been extended from 30 November 2020 until 30 June 2021, as part of the NT’s COVID-19 relief measures. The extension applies to a duty concession of AUD 10,000 for senior, pensioner and carer concession cardholders on the purchase of a principal place of residence for up to AUD 750,000; and the extension also applies to the Territory Home Owner Discount, being a duty discount up to AUD 18,601 for home buyers spending up to AUD 650,000, where the home buyer has not owned a home in the NT in the past 24 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 2020 State of the Land report, in 2019, Sydney’s median lot price was $459,000, Melbourne’s was $330,000 and Adelaide’s $179,000.

The average cost of land in Sydney was $1209 per sqm, Melbourne $837 per sqm and Adelaide $400 per sqm.

Average cost of building a home

The cost of building is influenced by many factors, but in December last year, the Australian average was $1393.55 per sqm, according to the Australian Bureau of Statistics (ABS).

However, this figure doesn’t include design, planning permits, any site works or any cost blow-outs.

According to ABS December 2019 Buildings Approvals data, the average dwelling in Australia spans 229.8sqm, 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).

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:

  • size
  • quality
  • site considerations
  • desired timeframe
  • complexity

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.

The quality of finishes will affect the final cost of a home build. Picture: realestate.com.au/buy

“If you are 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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