The cost to build a new house in Australia has surged over the last few years driven by massive supply and trade shortages.
And at the same time more and more builders are going broke, causing builders to place hefty margins on new contracts to ensure they remain solvent.
So how much can you expect to spend when building a house in Australia today?
The answer to this could be summed up with that frustrating yet often accurate phrase: How long is a piece of string?
There are a number of different factors that can affect the cost of building a house, including but not limited to:
- The size of the dwelling
- The location and availability of resources the slope of the land
- The quality of the fixtures and fittings
With this in mind, there are some “ballpark figures” I can come up with, to give you a guide as to how much it may cost you to build a property.
However, when building a new home, the final cost of construction can differ from initial expectations at the building approval stage and even at the start of construction.
There may be numerous reasons for cost variations prior to and during construction, Examples include costs and contracts being finalised after council approval is sought or unexpected delays and complications during construction.
Note: So many factors have increased building costs!
It's worth understanding that when building a new home:
- 40-45% of costs of the total cost to build is the cost of materials
- Around 35-40% of the cost is labour
- There are many taxes and charges, insurance, and overheads
- And the build would like to make a profit margin of around 15-20%
It all started a few years ago with Covid related restrictions.
Thanks to volatile exchange rates, supply chains being impacted, and reduced productivity due to COVID-19 restrictions, floods and rains, costs have risen and the time to complete projects has dragged out pushing up the cost of construction.
Then there are the supply chain issues around the world due to the Russian-Ukraine war and things are getting worse.
The shortage of materials and labour is likely to significantly increase housing construction costs over the next couple of years.
Currently, the rate of increase in building costs is slowing and the supply chain is stabilising, but the critical shortage of skilled labour, compounded by the collapse of a number of building companies, is still keeping costs elevated.
Let's start with a look at how building cost have changed around Australia...
The Cordell Construction Cost Index (CCCI) rose 0.5% through the September quarter, taking annual growth in the index to 4.0%.
September marked the fourth consecutive slowdown in the pace of growth for residential construction costs on a quarterly basis, which recently peaked at a quarterly increase of 4.7% in the three months to September 2022.
The 0.5% result was the smallest lift since the June quarter of 2019, and is below a pre-COVID decade average of 1.0% per quarter.
This suggests that while construction costs are still very elevated, the ongoing level of increase has normalised.
The recent slowdown in the growth rate of construction costs is broadly in line with the ‘new dwellings’ cost sub-component of the ABS CPI figures.
The continual easing in the Cordell Construction Cost Index (CCCI) may also be a forward indicator of inflationary pressures easing within the building sector.
According to the Cordell costings team, cost pressures in construction are shifting from an issue of materials to labour.
Material costs have stabilised (though at high levels), while lower levels of employment in building construction and an increase in award wages and superannuation have added to labour costs.
The cumulative growth in the CCCI since the onset of the pandemic is 25.6% nationally.
However, there are some forward indicators which suggest capacity in housing construction may increase in 2024 which may put less pressure on the cost of building a home.
One of these is a relatively low number of dwelling approvals.
Since the start of 2023 through to August, monthly dwelling approvals have averaged 13,289 per month, 23% below the decade average.
As the elevated pipeline of dwellings under construction moves to completion, this will create a shortfall in new projects and could help to reduce building costs.
New South Wales
The CCCI for NSW rose 0.6% in the September quarter, which was steady in the previous quarter.
However, the annual increase in the index sank to 3.9%, which is down from 7.3% in the previous quarter, and is the lowest annual rise since June 2021.
The quarterly increase of 0.6% is down from a recent high of 4.0% in the September quarter of 2022 and is also lower than the pre-COVID decade average of 0.9%.
This points to a stabilisation in the increase in residential construction costs.
Similar to the national landscape, dwelling approvals have eased off in NSW substantially through 2023, running -25.8% below the historic decade average in the year to date.
This could help to further ease cost pressures in the construction sector next year, as the elevated pipeline of construction is worked through.
While growth in construction costs sat at 0.6% in the three months to September, quarterly growth in NSW dwelling values was 2.1%, down from 4.2% in the June quarter.
The median dwelling value across NSW was recorded at $931,870 in September.
Victoria’s CCCI increased by 0.3% in the September quarter, down from 0.7% in the three months to June.
This was the fastest deceleration in construction cost increases of the states through the quarter and was the second-lowest quarterly result behind WA (up 0.2%).
The rate of increase in the Victorian CCCI is a sizable reduction in growth from the September 2022 quarter, when residential construction cost increases peaked at 5.6%.
Quarterly growth is now running well below the pre-COVID decade average of 1.0%.
The annual increase in the Victorian CCCI was 3.7% in the year to September, down from a peak of 13.0% in the 2022 calendar year.
However, the cumulative increase in construction costs since the onset of the pandemic is high across the state, at 26.4%.
Dwelling value increases across the state outpaced the rise in construction costs through the September quarter.
Quarterly growth in Victorian dwelling values was 1.0%, down slightly from 1.6% in the June quarter.
The median dwelling value across the state in September was $728,250.
Across Queensland, the CCCI increased by 0.8% in the September quarter.
Unlike the other states and the national index, Queensland was the only location where growth in the CCCI accelerated through the quarter.
The increase was up 10 basis points in the three months to June but was still well below the recent peak of 5.8% in the September quarter of 2022.
The quarterly growth rate in the Queensland CCCI was also below the pre-COVID decade average of 1.1%.
The CCCI measure also shows Queensland has had the greatest cumulative increase of the states in residential construction costs since the onset of the pandemic, at 28.4%.
However, as with the national picture, new dwelling approvals have been slowing.
Monthly dwelling approvals through 2023 are trending around -18% below the decade average, which should help to reduce pressure on demand for construction inputs in the future.
While the CCCI rose 0.8% in the quarter, dwelling values across Queensland rose 3.2%.
Demand for homes across the state has been high amid strong internal migration trends through the pandemic period.
The median dwelling value across Queensland was $679,582 as of September.
Across WA, the CCCI rose 0.2% in the September quarter.
This was the lowest increase of the states and was one of the fastest slowdowns in quarterly growth behind Victoria.
Quarterly growth in the index slowed by 30 basis points from 0.5% in the three months to June.
Quarterly growth is down from a recent high of 4.3% in the September quarter of 2021 and is running below the pre-COVID decade average rate of 1.0%.
The reduced quarterly growth rate has taken the annual increase in the CCCI to 3.6%, down from 10.4% in the 2022 calendar year.
As with each of the states, construction costs are extremely elevated, but the ongoing pace of increases is now far more normalised.
Dwelling values, as measured through the CoreLogic Home Value Index (HVI), rose 3.4% in the September quarter, which has accelerated from a 2.6% increase through the June quarter.
Dwelling values across WA have seen some of the strongest capital growth levels across the state since the onset of the pandemic (up 39.2%), but rising construction costs have reduced the feasibility of some new development projects.
This is also reflected in monthly dwelling approvals, which have run -38% below the decade average through 2023 so far.
In SA, the CCCI increased 0.6% through the September quarter, easing from a 0.8% increase in the three months to June.
The 0.6% result was the smallest increase in the CCCI since the September quarter of 2020 when the effects of material constraints and a surge in demand from HomeBuilder were yet to be fully felt in the residential construction space.
Quarterly growth is down from a recent high of 3.4% in the September quarter of 2022.
This easing in quarterly growth took the annual rise to 4.1%, down from a recent high of 10.5% in the 2022 calendar year.
Quarterly growth is now running below the pre-COVID decade average of 0.9%.
Changes in the SA HVI show that dwelling value increases since the onset of the pandemic were 47.9%.
This has far outpaced the increase in the CCCI over the same period, which was 24.5%.
However, alongside high-interest rates, higher construction costs have led to some slowdown in demand for new dwellings across the state.
This is reflected in monthly dwelling approvals, which were trending - 3.5% below the decade average through 2023.
New code changes will push up building costs even more
All residential construction must adhere to comprehensive building codes and standards governed by local and state laws
Recently introduced new national home building codes designed to ensure more liveable housing and energy efficient are tipped to drive up the price of an average home by a further $30,000 according Master Builders Association.
The changes will be introduced from October 1 in Queensland, although other states have delayed their introduction.
Queensland MBA chief executive Paul Bidwell says the increases come on the back of a 42% increase in the cost to build a new home in the past three years.
“We have supported inclusive, sustainable and affordable housing and been in discussions with government and stakeholders for years – however, in the face of a housing crisis and rising costs, do not believe now is the right time to introduce these changes.”
While the stats above suggest the cost to build a new home is not growing as fast as before, for the last few years house building costs across all major Australian markets have been growing faster than inflation.
Disruptions caused by COVID-19 were largely to blame last year with global supply chain issues negatively impacting both material delivery and pricing, while state and international border closures led to intractable labour shortages.
This year the Russia-Ukraine war’s effect on the cost of oil and aluminium, transport blockages, and supply chain shortages are having an impact on further price increases.
The average cost to build a house per square metre
BMT Quantity Surveyors latest report shows the average cost to build a house per square metre of new single and double-storey dwellings throughout Australia for the third quarter of 2022.
The costs in the table below are for Sydney, buy you can still use them as a guide by applying one of the following regional variation percentages.
This will give you an approximate cost for the construction type per square metre in your area.
- Cairns - 110% - 130%
- Brisbane - 95% - 115%
- Sydney - 100% - 100%
- Canberra - 92% - 120%
- Melbourne - 95% - 105%
- Hobart - 95% - 120%
- Adelaide - 95% - 108%
- Perth - 98% - 120%
- Darwin - 110% - 135%
Average costs to build a house
|Construction type||Level of finish|
|3BR weatherboard project home||$1,786||$1,999||$2,473|
|3BR brick veneer project home||$1,904||$2,120||$2,532|
|3BR full brick project home||$1,895||$2,114||
|4BR weatherboard home||$2,508||$2,680||$3,344|
|4BR brick veneer home||$2,665||$2,791||$3,512|
|4BR full brick home||$2,981||$3,405||$3,752|
|3BR brick veneer project home||$1,985||$2,193||$2,705|
|3BR full brick project home||$2,059||$2,315||$2,840|
|4BR brick veneer home||$2,786||$3,149||$3,655|
|4BR full brick home||$3,079||$3,535||$3,859|
|Architecturally designed executive residence||$4,086||$5,231||$7,317|
Source: BMT Quantity Surveyors
Average costs to build a townhouse
|Construction type||Level of finish|
|2BR single-level brick veneer townhouse||$2,800||$3,185||$3,587|
|2BR 2-level brick veneer townhouse||$2,875||$3,238||$3,763|
|3BR single-level brick veneer townhouse||$2,773||$3,157||$3,548|
|3BR 2-level brick veneer townhouse||$2,847||$3,317||$3,777|
Average costs to build units
|Construction type||Level of finish|
|3-level walk-up unit complex||$2,947||$3,163||$3,838|
|3-level walk-up unit complex||$2,888||$3,104||$3,777|
|4-8 level unit complex||$3,366||$3,623||$4,388|
|4-8 level unit complex||$3,292||$3,548||$4,315|
|8 or more level unit complex||$3,493||$3,964||$5,042|
Average industrial construction costs
|Construction type||Level of finish|
|High Bay Warehouse, standard configuration, concrete floor, metal clad||$1,446||$1,633||$1,761|
|High Bay Warehouse, standard configuration, concrete floor, pre-cast concrete wall clad||$1,775||$1,876||$2,091|
Average hotels construction costs
|Construction type||Level of finish|
|Single-level boutique motel including A/C, guest facilities||$4,672||$5,346||$7,027|
|Single-level tavern/hotel including A/C, excluding loose item fit out||$3,898||$4,638||$5,581|
Average office construction costs
|Construction type||Level of finish|
|1-4 level open plan offices||$3,036||$3,385||$3,978|
|4-8 level open plan offices, including A/C & lifts, excluding fit out||$3,519||$3,777||$5,078|
|8 levels and over||$5,035||$5,318||$5,560|
Source: BMT Quantity Surveyors
Average retail construction costs
|Construction type||Level of finish|
Source: BMT Quantity Surveyors
But average building costs per square metre by cities is just one factor to take into account when working out home building costs.
Because the answer is more complicated than it might seem.
That’s because the location, size, and cost of the block it’s built on and the finishes all affect how much it costs to build a house.
So the cost of building a house in Melbourne would be vastly different from the cost of building a house in Brisbane, or even the cost of building a house in Adelaide, Perth, or Sydney.
To give a rough idea, quantity surveyors RLB has also produced a new report on the price of a home-build per square metre based on different states, which identifies Brisbane as the most expensive city for home building, with the price ranging from $2500 to $4500.
Sydney has a lower start price but a higher range, from $2100 to $6400, with Melbourne a more modest $2000 to $4300.
|City||Cost per square metre|
Source: Rider Levett Bucknall
So now we have a vague idea of how much it costs to build a house in Australia depending on the cost per metre square, location, size of the block, and even the fittings.
But what about the size?
It’s all well and good to get a ‘per square metre’ indication of price – but how do you translate that into actual costs, to give you an understanding of how much you’re going to pay to construct your new home or investment property?
There’s no point in going to the bank and saying,
I need to borrow $1190 per square metre.
They’re going to need a little more info to go on than that!
Builders and architects often use a per square metre (m2) figure to cost a project so this is a good baseline to work from, according to a page cost guide.
The average cost to build a 3-bedroom house
To build a 3-bedroom house you can expect to pay in the region of:
- $1300 per square metre for a 3-bedroom weatherboard house on a level block, using budget materials
- $1600 – $1900 per square metre for a 3 bedroom full brick single level project home, on a level block, using mid-range to high-end materials and finishes
The average cost to build a 4-bedroom house
To build a 4 bedroom house you can expect to pay in the region of:
- $1,900 per square metre for a 4 bedroom single level, brick veneer home on a level block, using budget materials
- $2,400 per square metre for a 4 bedroom brick veneer single-level project home on a level block using mid-range finishes
- $2,900 per square metre for a 4 bedroom full brick two-level home on a level block using top-quality finishes
- $3,900+ per square metre for an architect designed 4 bedroom full brick, two-level home on a level block using top-quality finishes
The average cost to build a 5-bedroom house or second story
To build a 5-bedroom house you can expect to pay upwards of $4300 per square metre.
If you want to know how much a second-story extension costs, expect to be charged anywhere from $1850 to $3300 per square metre, depending on the quality and price of the construction materials and inclusions.
First up, the figures I’ve detailed above are just a rough guide, as building costs can vary significantly based on your location, the project design, and the level of the fit-out.
And remember, a builder’s advertised base price is generally only a starting point and does not reflect how much your home will actually cost when it’s 100% completed.
This is because these “starting from” prices usually only include the basics.
If you are looking for a complete price that includes everything from the carpeting through to the landscaping and driveways as well as the white picket fence at the front, then you need to shop around for what’s known as a “turn-key” package – which means all you need to do at the end is turn the key and step inside.
And then there is the added recalculation needed depending on where the property is located, its size, and the quality of finishes.
It’s not as simple as getting one price quote - the cost of building a house varies widely depending on where and what you’re planning to build.
And this is even more so the case in today’s market where the cost of materials is consistently and steadily increasing, almost by the day.
Thanks to Australia’s rising inflation, almost every category of building materials have become more expensive.
For example, prices of steel products have surged 42.1 per cent in the year ending March 2022, according to ABS figures.
And that doesn't take into account the level of inflation and subsequent price increases which have occurred since March up until today.
And then the cost of an architecturally designed home to one built by a volume builder would differ again.
But to give a very rough idea, in April 2022 the figures from the ABS suggested that, on average, building a home cost around $473,000 (including houses and unit data).
As mentioned earlier, there are a number of costs that come into play when building a house.
For a standard brick home without any custom finishes, you may be able to come up with a fairly clear budget.
However, once you start factoring in extras such as landscaping, driveways, retaining walls, fences, upgrades, finishes, and fittings, your costs can increase significantly.
We already know that the breakdown of the costs to build a house would differ depending on the size of the property, location, and finishes, but what about the hidden costs of building a house?
Here are a few costs you might have overlooked.
1. Site costs
These are the expenses that are incurred to prepare your block of land before construction can even commence.
These are usually completed by your builder and in most cases, the site costs are charged on top of the build price.
Some of the typical expenses involved in a site cost can be:
- Connections to services such as water, sewer, electricity, and gas
- Retaining walls
- Site clearance (trees, roots, bushes)
- Site survey
- Soil tests
According to the Urban Development Institute of Australia's (UDIA) 2022 State of the Land report, a surge in demand for new land underpinned a 6.0% increase in the national median lot price to $322,379 between June and December 2021 across the major capitals.
The most expensive greenfield market, Sydney, recorded a 14% increase in median pricing in 2021 with a year-end lot price of $543,750.
This median lot pricing increase was largely driven by a spike in September quarter pricing to $585,000 a lot.
After a two-year decline, Melbourne recorded an annual increase in median lot pricing, rising by 14%, to finish the year at $327,475.
Southeast Queensland recorded a 5% annual price uplift to $272,375.
At this median price-point level SEQ continues to hold an affordability advantage over the other two major east coast housing markets, being 50% cheaper than Sydney and 17% cheaper than Melbourne.
Perth’s median lot pricing grew a modest 1% to $215,2000 (which is the first price increase after six years) and the ACT also saw median pricing rise by 9% to $453,000.
Adelaide recorded a 2% annual price increase in 2020 to $187,250 and remains Australia’s most affordable market by some margin.
The increase in lot prices coupled with the minimal rise in lot sizing has delivered further slight increases in the price of land on a per square metre basis across most markets, the UDIA report also noted.
Sydney's land price recorded the most substantive growth with a 17% increase to $1,504 per sqm.
Melbourne’s land price also increased 8% in 2021 to $883 per sqm.
Southeast QLD recorded a 9% growth in land pricing to $679 per sqm.
ACT recorded an 11% rise in land price to $922 per sqm.
Perth's land price increased by a modest 1% to $574 per sqm.
Adelaide recorded modest growth in the metropolitan land rate with an uplift of $416 per sqm.
2. Other factors that can affect the build price
Once you have signed a contract with a builder and decided on the layout and design of your property, they will make plans and prepare documents, before arranging a ‘pre-start meeting’.
The pre-start meeting is at the stage at which your house plans are finalised.
They are approved by the council and you are ready to make your final choices in regards to all of the design aspects, such as wall colours, the types of light fittings, and the materials used on the roof and on floors.
The ‘prime costs’ are generally already in place by the builder, however, keep in mind that in base contract packages, the prices factored in often account for the cheapest materials, the most basic fittings, and the most standard fixtures.
If you wish to change any of these, you could incur an extra cost.
Some of the parts of the home that you may wish to ‘upgrade’ during this process include:
- Roof: Depending on the materials you choose for your roofs, such as tiles or colorbond, this can vary widely
- Tiling: An allowance for a tiling amount per sqm will be made, but this can change depending on the quality and size of your final choice.
- Fixtures and fittings: Fancy, nonstandard taps, and European appliances will obviously cost more than standard Australian-made fixtures and fittings. Additionally, labour costs may increase if you select items that are more complicated to install. Inclusions such as fully ducted air conditioning can cost up to $10,000 (more for a two-storey home).
- Kitchen: If you’ve ever shopped for a kitchen benchtop, you know how widely the costs of a kitchen upgrade can vary. Again, the final price will depend on the quality of the item you choose and what is in your initial specification in the contract.
- Electrical: If you decide to change your lighting layout from what has been initially drawn, this can add costs. For example, if the specifications in your contract allow for one standard light per room but you wish to have multiple downlights, this extra cost can add up.
3. Extra costs you should allow for
Some extra costs you need to take into account and which could end up costing you a significant amount of money include:
- Soil quality: One of the first things your engineers will organise is a soil test. They do this by drilling some boreholes and the best classification you can get is M classification soil. If your soil is more difficult to work with eg. Clay, Sand or Rock then you’re likely to have to pay extra.
- The slope of the block: The easiest site to build on is a flat block. If your block slopes you’re likely to have to pay extra for more foundations or to cut and fill the site (make it flat) and possibly for retaining walls.
- Flood-prone areas: some sites require the house to be raised with the floor level above natural ground level to cope with excessive rain or floods and this can add to the construction cost.
When you go through the process of building a home, you’ll come across plenty of industry jargon that can be tricky to understand – and even trickier to price.
Here are a couple of terms that may be included in your building contract, which are important to understand:
A provisional sum is an estimated amount of money that is determined by the builder, according to how much they believe the relevant job or material will cost.
Often the builder can’t put a fixed cost on certain parts of the job at the time of providing a quote or signing the building contract because of unknowns.
For example, while your site may look flat and the builder quotes as such when starting the works, they may discover large clumps of rock that need to be removed and levelled prior to the slab being laid.
Or when the builder starts digging your foundations they realise they have to dig down further to hit firm footings, which will eventually require more concrete to be poured.
At times like this, you’ll need to pay an additional sum on top of the initial contract price, as the allowance that had been provided has been exceeded.
Note: It is always a good idea to budget for around 10% of the total build price to allow for fluctuations in provisional sum prices.
A prime cost is an item that is subject to change during the construction of your home.
These include things like fixtures and fittings such as tiles, doors, and taps, as these items may change depending on your final choice.
You’ll find an estimated amount is provided when signing the building contract and then depending on your specification of the finishes during the build, these prime cost items may cost more or less if you elect to change them along the way.
Note: These items generally only change due to your change in preferences, so this could be an opportunity to trim costs if you opt for basic or standard fixtures, fittings, and finishes.
It’s not just prices that have shot up since the COVID-19 pandemic began, the time to complete construction has also blown out.
A renovation that would have previously taken 4 months is now taking 6-8 months, and a new build that would have been 6-8 months is taking 12-18 months.
That’s really putting additional pressure on both builders who need the cash flow and the consumers who might be paying rent on one home while the building takes place for another, or who have two mortgages.
Unfortunately, a number of building companies have folded, having signed fixed-price contracts earlier in the pandemic and not being able to complete their contracts.
The problem is that when it comes to the question of ‘how long', there are just too many variables.
And currently, there are ongoing construction delays associated with COVID-19, only adding to the time taken to build a house.
Then, there are the unforeseen hurdles that always seem to arise when building - things like unfavourable soil conditions such as rock removal, bad weather (of which there has been a lot this year, particularly in NSW and QLD), or waiting for certain permits or approvals.
Having said all of that, the average time to build a two-storey house is currently roughly 10-12 months.
Note: While the cost of building a home has clearly increased, the price of purchasing an established home in Australia has also skyrocketed.
And there may be more price hikes to come yet.
The average cost of building a house varies due to a range of factors, including size, location, and quality of fixtures and fittings.
While I’ve tried to give you estimates, the final price will depend on whether you chose a display home that the builder has designed with cost efficiency in mind, or a unique home- your own special castle which has never been built before.