The cost of building a new house is rising faster than inflation across most of the country, with Tasmania and South Australia remaining the cheapest markets despite leading the growth.
The average construction cost is now $427,835 in Tasmania following a 9.2 per cent rise over the past 12 months, while its $424,222 in SA following an 8.2 per cent increase.
OpenLot.com.au chief executive Qi Chen, who analysed the Australian Bureau of Statistics data, said inflation was 3.8 per cent in the 2024 financial year.
Construction costs also rose higher than inflation in WA (7.2 per cent), the NT (5.5 per cent) and Victoria (4.9 per cent).
RELATED: ‘End of the queue’: Crippling shortage threatens housing
Building costs for new houses are rising faster than inflation across most of the country. Photo: Brett Wortman
Meanwhile, NSW recorded a 3.6 per cent rise and QLD a 2.8 per cent increase, while the ACT saw a slight drop.
Mr Chen said there were several factors that explained the price hikes.
“For example, Victoria and New South Wales are both high-cost states, but new house projects are large enough to offset some of these expenses,” he said.
“In both the Northern Territory and Tasmania, high import and logistics costs take a toll.”
Mr Chen warned building costs for new houses were likely to become more expensive over the next year.
“In new neighbourhoods, some consumers are reacting by trimming their expectations,” he said.
“They may buy one less bedroom or less expensive fixtures and finishings.”
MORE: How each generation is sacrificing to buy a home
The average new house build costs. Source: OpenLot.com.au, Australian Bureau of Statistics.
Master Builders SA chief executive Will Frogley said materials, particularly concrete, and tradie shortages were also leading to rising building costs.
“There are shortages right across the board with tradies and I don’t see that problem going away anytime soon,” he said.
“We need an extra 10,000 tradies within two years to meet projected demand.”
Mr Frogley said training and recruitment was needed to get more people into the industry.
“If there’s an upside to this it’s that it’s a fantastic time to get into the building and construction industry,” he said.
“If you’re a person who wants to get into the industry and earn good money, the world is going to be your oyster.”
MORE: Coastal town joins SA’s million-dollar club
The cheapest areas are also the ones that have recorded the highest rate of growth over the past year.
Master Builders Australia chief economist Shane Garrett echoed Mr Frogley’s comments and added long build times were also contributing to rising costs.
While improving, he said homes were still taking much longer to build now compared to pre-Covid.
“It’s been a challenging number of years for the construction industry,” Mr Garrett said.
English (US) · 