{"id":39471,"date":"2022-07-10T15:19:31","date_gmt":"2022-07-10T03:19:31","guid":{"rendered":"https:\/\/propertynoise.co.nz\/au\/?p=39471"},"modified":"2022-07-10T15:19:31","modified_gmt":"2022-07-10T03:19:31","slug":"australian-house-build-cost-jumps-9k-in-12-months","status":"publish","type":"post","link":"https:\/\/propertynoise.co.nz\/au\/australian-house-build-cost-jumps-9k-in-12-months\/","title":{"rendered":"Australian house build cost jumps $9k in 12 months"},"content":{"rendered":"

PHOTO: The cost of building Australian homes is rising faster than at any time since 1982. Picture: Dan Himbrechts<\/strong><\/p>\n

According to realestate.co.nz\u00a0<\/a>Australia\u2019s 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.<\/p>\n

Shock new figures revealed in analysis by the Housing Industry Association and News Corp Australia show how the price of the new home dream has exploded since July 1970, when the average new build cost just $11,543.<\/p>\n

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\u2019s builders into insolvency.<\/p>\n

The staggering growth is also hitting the nation\u2019s mortgage payers, with the cost of housing a key component of the inflation figures driving the Reserve Bank of Australia\u2019s 1.5 per cent increase rate hike over the past three months.<\/p>\n

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BUILDING CRISIS: Another building company in liquidation<\/a><\/h2>\n<\/header>\n<\/div>\n

Analysis of the Australian Bureau of Statistics\u2019 most recent building approvals data shows the average price of a new house approved in the nation\u2019s private sector in May was $413,436.<\/p>\n

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.<\/p>\n

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 HomeBuilder grants before it was concluded in March, 2021.<\/p>\n

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Australia\u2019s national average home build cost from 1970 to today. Data compiled based on ABS figures.<\/strong><\/em><\/p>\n<\/div>\n

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But building approvals continued to surge as \u201cthe more people stayed at home through lockdowns, the more new homes they wanted\u201d.<\/p>\n

\u201cWe are looking at the fastest rate of growth in the average cost of an approved house build since 1982,\u201d Mr Reardon said.<\/p>\n

In Victoria, which is building more new houses than any other state, there was a $32,000+ jump in the typical house\u2019s approved construction costs from March to April.<\/p>\n

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.<\/p>\n

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Australia\u2019s typical home build has become vastly more expensive since 2021.<\/strong><\/em><\/p>\n<\/div>\n

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Buyers hoping costs will fall with demand have been warned not to wait.<\/p>\n

\u201cThere have only been five instances of that in 50 years, and usually that fall is followed by strong growth,\u201d he said.<\/p>\n

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Building firm fires all staff on the spot<\/a><\/h2>\n<\/header>\n<\/div>\n

Builders Collective of Australia president Phil Dwyer has been constructing houses since the 1970s and 1980s, when rising home-building costs were driven by buyers\u2019 desires, not material prices.<\/p>\n

\u201cAll of a sudden we had everyone wanting a McMansion rather than a three-bedroom home in the suburbs,\u201d he said.<\/p>\n

Significant changes to the way the industry works since then have left builders extremely exposed to rising material costs, particularly with builders\u2019 margins plunging from around 20-25 per cent to 8-10 per cent.<\/p>\n

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National president of the Builders Collective of Australia Phil Dwyer, photographed in 2017. Picture: Jake Nowakowski.<\/strong><\/em><\/p>\n<\/div>\n

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\u201cAnd when I started there was a mutual agreement that you would vary the contract because of circumstances and that was generally accepted, though not necessarily a given,\u201d Mr Dwyer said.<\/p>\n

With fixed-price contracts now leaving builders little wiggle room, he warned there would be a rise in particularly smaller builders going to the wall in the coming months.<\/p>\n

\u201cIt could be up as high as 50 per cent in the next 12 months after Christmas,\u201d he added.<\/p>\n

More established groups with significant reserves to fall back on were more likely to survive, he said.<\/p>\n

Mr Dwyer added he hoped he was wrong about his predictions, but said \u201cI have never seen the cards laid out the way they are at the moment \u2014 I have never seen it this bad\u201d.<\/p>\n

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Housing construction is expected to slow in Australian suburbs in the coming years.<\/strong><\/em><\/p>\n

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