Build costs soar more than $94,000 in 15 months

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Build costs soar more than $94,000 in 15 months

Housing Industry Association (HIA) stats reveal house building costs jump by $94,000 in the strongest rise since 1982: ABS.

But sales of existing homes are strong as Australia’s typical house build cost has soared more than $94,000 in 15 months in its biggest surge since McMansions were taking over our suburbs in 1982.

New figures revealed by the HIA show how the price of new homes exploded since July 1970, when the average new build cost was just $11,543.

The head of the Builders Collective of Australia has warned the latest increases, unlike anything he has seen in close to 50 years as a builder, could force half the nation’s builders into insolvency.

The staggering growth is also hitting the nation’s mortgage payers, with the cost of housing a key component of the inflation figures driving the Reserve Bank of Australia’s (RBA) 1.5% increase rate hike over the past three months.

Analysis of the Australian Bureau of Statistics (ABS) most recent building approvals data shows the average price of a new house approved in the nation’s private sector in May was $413,436.

Remarkably, the figures also reveal the cost of building a new home actually declined for the first half of the Covid-19 pandemic to $319,259 in February, 2021.

HIA chief economist Tim Reardon said this was due to a glut of first-home buyers building smaller, cheaper homes after the federal government offered $15,000-$25,000 Home Builder grants before it was concluded in March, 2021.

But building approvals continued to surge as “the more people stayed at home through lockdowns, the more new homes they wanted”.

“We are looking at the fastest rate of growth in the average cost of an approved house build since 1982,” Mr Reardon said.

In Victoria, which is building more new houses than any other state, there was a $32,000+ jump in the typical house’s approved construction costs from March to April.

Mr Reardon said he believed cost increases would slow as the nation pulled back from building 150,000 new houses in the past year to a more typical 108,000 by 2024-2025, but the coming 12 months is likely to be the second fastest growth period in the past 40 years.