Choosing to build a new house can be daunting – there’s so much to consider and plenty of variables that might influence whether now is the right time or not. Land prices could fall tomorrow, or the construction company you’ve had your eye on might introduce a new sale price the day after you book them. Similarly, costs could increase if you wait too long, taking up more of your budget and meaning rearranging to be able to afford it all. There is so much uncertainty within the building process, so let us try and calm your mind with some advice. Let’s explore whether right now is the best time to build a house or not.
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Permits and planning permission needed to build a house in Australia
Planning and building permits are required by law under the Buildings Act 1975, which is in place to protect you and your property. These regulations state that all building work requires a building permit unless exempt under the regulations. New builds are not exempt.
Planning permits
Planning permits give you permission to use your owned land in a particular way, so you might need planning permission for new homes, extensions, renovations, and additional dwellings. To get this, you’ll need to apply to your local council with your plans. You’ll need to be awarded your planning permit before you can apply for your building permit, so this is the first step you need to take in building your new build.
To be granted a planning permit, you’ll most likely need to include a proposed design, planning report, shadow diagrams, and other relevant documentation. Your local council will be able to tell you more about the process of obtaining this documentation.
Building permits
Building permits certify that your proposed building complies with the relevant building regulations. This is written approval by a building surveyor and allows work to begin according to the approved plans. New builds will need a building permit, and this documentation protects you by making sure:
- The construction companies working on your project are registered with the required insurance
- The most important stages of your building process are independently inspected
- Enough documentation is prepared so construction can begin correctly and according to building legislation
- Your new build is suitable for documentation
Changes to the National Construction Code (NCC) were implemented on 1 May 2024 to improve energy efficiency standards. Check out the 2024 NCC changes here.
When do you need work to commence after obtaining your building permits?
If you’ve already obtained your planning and building permits but aren’t sure whether you want to start building yet, it’s important to remember that you’re now under a time constraint before the permits lapse.
Most building approvals are valid for two years from the date of issue, giving you plenty of time to build your house. If you are adding a swimming pool to your house, this must be checked within six months from the date of issue.
If you have a demolition approval in place for an existing house, this is valid for one-year.
If you’re yet to apply for these permits, then you don’t have to worry about these times. However, if you’ve already paid for your permit applications, you’ll most likely want to put a rush on your plans to avoid wasting money and having to reapply all over again.
Is it the right time to build a house in Australia?
Construction costs peaked in 2022, so it’s understandable that you might be feeling uncertain about whether you wait for them to stabilise again or just go for it. The good news is that these costs have stabilised somewhat since peaking a few years ago, but that doesn’t mean it’s all smooth sailing from here. Let’s look at a few things to think about before committing to build:
Rising costs
The cost of living is still increasing at a steady rate, which means the prices of everything are going up. Not only will you likely have to pay more for materials, but you’ll also probably have to pay a higher cost of labour. This means your budget might not stretch as far as it would’ve a few years ago, so you might not be able to incorporate all of the bells and whistles into your design.
Prices may keep rising, so now is the best time to lock in and book your construction team for a fixed rate, but they might also fall. It’s up to you whether you want to gamble with waiting longer to see how the prices change.
Labour shortages and competition
The price spikes in 2022 were mostly due to low amounts of materials available, so the prices increased as supply dwindled and demand rose. However, more recent price changes are actually being put down to not having enough construction workers to complete the projects, which allows construction companies to put their prices up.
As there are fewer construction companies in the market at the moment, thanks to labour shortages, there’s more competition between you and other developers in your area. Be prepared to enter a bidding war for your construction company if you want to start work as soon as possible, or you could wait until there are cheaper labourers to work on your project.
Will the Australian property market crash soon?
The Australian property market is still recovering from the pandemic, which turned into another dip, then a rebound, and then a stage of plateauing before 2024. The CoreLogic Home Value Index indicated a national annual growth of 7.6% as of July 2024, but this figure is just an average. Different areas have varying levels of growth, such as:
- Melbourne: 0.2% increase
- Canberra: 1.7% increase
- Perth: 24.7% increase
- Sydney: 5.6% increase
These increases pose a huge threat to the affordability of homes in Australia, reducing the number of homes that are being bought and sold on the market right now. This indicates that the market could crash as new homes are introduced to offer more choices to the fewer buyers who are looking right now.
If you’re planning on building a home to sell, right now might not be the best time. We might recommend waiting for the market to stabilise, despite this potentially taking a few years. However, if you’re planning on building for your family, the market condition shouldn’t make such a big impact on your decision.
Key considerations to make before building a house
If you’re planning on building your house soon, we can’t recommend getting ready beforehand enough. Here are some of the most important things to consider before beginning your build:
Budget
A realistic budget is essential for any construction project, so take the time to create a full budget with itemised lists and ideal costs for each thing. Due to the higher costs in Australia, you might not be able to afford everything you had your mind set on, so creating a budget can help you determine what you can’t live without and what you can add on at a later date.
When budgeting for a new build, we don’t recommend adding a safety net budget to cover any unforeseen costs you might encounter during the process.
Choosing your spot of land
When building a home, you’ll need the perfect spot of land. Unfortunately, land prices have also never been higher in Australia, and research shows that some families are paying over six figures more than they would’ve for the same land package 12 months ago. For example, Brisbane’s median lot price has risen 107.7% higher over the past year.
If you already have your land ready to go, this might not be a problem, but if you still need to choose a spot for your new build, you might want to hold off until prices come down.
Land preparation
One of the first things you’ll need to do when building your new home is prepare your land to ensure a level surface. This might require excavating or even demolishing another structure. The weather plays a big factor here, as well as the type of soil you’re working with. For example, wet sandy soil is much lighter and easier to dig than wet clay soil. Some landscapers might charge more if you have a clay soil base and are hiring them in the wet weather season, in which case it’d be wise to hold off on your project and build it once the season changes.
Working with trusted employees
Building a house takes a village, and you’ll need to hire plenty of contractors during your experience. As we’ve already mentioned, there’s a shortage of experienced labourers at the moment which is increasing prices. This differs from where you’re building, so shop around to see if this is a problem in your chosen area. You might be able to find less experienced builders and architects for cheaper, but consider whether you want to take the risk or wait for more experienced contractors to open their books. You might find waiting to begin building is a safer bet so your jobs can get done correctly and to the highest standards the first time around.
For a free, impartial consultation about your new build, get in touch with Buildi today!
There are so many variables to consider when deciding when to build your new home, and making the decision on your own might feel impossible. Buildi’s team of experts are here to help with free, impartial advice on anything you may be unsure of. If you need a second opinion or are still wondering what’s the best decision for you, why not give us a call at 1300 947 132 or get in touch through our Contact Form today so we can talk through your options.
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