The global pandemic is an event unlike any other we’ve experienced in our lifetimes, and the construction industry hasn’t been immune to its effects. This article is going to take an in-depth look at how much it’ll cost to build a house in Brisbane in 2023, one of those questions that seem so simple on the surface, but is rather difficult to answer due to the wide range of factors there are to take into account. As this information is constantly changing (especially in these strange times), we’re going to update this article regularly to stay on top of current trends.
Asking how much it costs to build a house is one of those “how long is a piece of string” type questions. It’ll depend on a variety of factors including:
- The size of the home you’re building
- Whether you’re using a pre-existing floorplan or custom building
- The location and any complications unique to this block of land
- Your choice in fixtures and features
- The builder you choose to go with
So, as you can see, without the details we can’t in good conscience just publish a random number and hope it’s close to what you’ll pay. We’re all about being transparent and the last thing we want to do is lead you down the garden path.
Latest changes resulting from COVID-19
What we can do is provide a broader picture of the property market and construction trends. Though the days of lockdowns are hopefully behind us and the borders are opening again, something as seismic as the COVID-19 pandemic will continue to have a ripple effect for a while. As you’ve no doubt read, construction costs have skyrocketed in the last year or so. The reason why this is being felt by so many homebuilders is construction costs are rising quicker than inflation is.
As the below graph shows, the price of materials has steadily been increasing which is a big part of the overall price rise. Timber especially has risen in price by a whopping 20%, which is a phenomenon seen globally as well as locally.
The other major change we have seen is home build times have gotten longer due to high demand, labour shortages and supply issues. Single-storey homes that would’ve previously taken 4-6 months can sometimes take up to 8-12 months to complete.
We have seen big changes in the Brisbane construction market and the global economy in 2020. This update will discuss how your cost to build will be affected by COVID-19, weather patterns and high construction costs. Most importantly, we will look at the New Home Builder grant and its effects on the cost to build! We will also look at how the increased volume has resulted in some major players in the building industry struggling to meet minimum requirements.
How did COVID-19 affect the Construction Market?
Firstly, during the COVID 19 pandemic, the federal government considered the construction industry an essential service. In mid-2020, there was a great deal of concern about the building industry. The building industry had just come out of a 3 year low with a 50% reduction in building approvals since 2016. Many thought a global pandemic would be the final nail in the coffin.
Despite this, things turned out much better than many expected for the Brisbane building industry. This is because of three things:
Firstly, Queensland had far fewer lockdowns than other states. These lockdowns were also shorter than what other states experienced, so Brisbane’s construction projects were able to carry on.
Secondly, Brisbane’s property prices are low when compared to Sydney or Melbourne. This has caused an influx of interstate buyers to invest their money in Queensland’s industry.
Thirdly, the New Home Builder grant would not exist if it wasn’t for COVID 19, as we will outline in the next section:
The New Home Builder Grant
For the past few years, the building industry was in decline. As the graph below shows, the number of new houses being approved was going down. Organisations like Master Builder and HIA decided to lobby the government to help builders stay in business. On June 4, 2020, the government decided to stimulate this declining industry with the New Home Builder Grant.
The purpose of this grant is to give $15,000 to owner-occupiers building their first new home. When this happened, many prospective home builders decided to jump on board and start building a house. This was the much needed lifeline the building industry needed.
Thanks to this government incentive to build, the building industry in Queensland turned around. The green arrow shows a reversal of this downward trend.
The building industry employs a large portion of the Australian workforce. By stimulating its growth in Queensland, the government was able to create lots of jobs in construction. Since so many other industries are related/affected by the building industry, the whole economy benefited from the New Home Builder Grant.
Over 75,000 owner occupiers have applied for the New Homebuilder Grant, as you can see by the sharp increase in the graph above. In order to receive $15,000, you must be moving into a new home for the first time. You have to finalise your building contract by 31 March 2021 and apply for the grant by 14 April 2021 (propertyupdate.com.au).
Insider insights have found that big building companies are not meeting the requirements of the New Home Builder Grant. Recently, a QLD building company told 30% of customers who signed before the cut-off dates that they were unable to meet the grant requirements. Unfortunately, this means they won’t receive any money.
Contact Buildi today! As a building broker, we put your interests first to make your dream home come to life. Having us on your team can save you a fortune. Our free consultation is the best way to get started.
SO, what has all the above done to Construction Costs?
With every solution, new problems are created. By stimulating the building industry with the New Home Builder Grant, the government caused new infrastructure projects to increase. Now, tradespeople are in short supply. There is high demand for builders, so the price to build your home is going up.
Let’s compare how things have changed in the time since the pandemic started. First, is how prices were in July 2020
Now let’s compare that with the latest numbers (July 2022) from the same source.
As you can see above, Napier Blakely estimates the cost to build a single-storey home was pegged around $910 to $1,400 per square metre in mid-2020. However, this has since risen to now be between $1120 to $1730 per sqm. With limited tradespeople available and material shortages, don’t be surprised if it costs more, or has risen since July 2022. Michael Yardney from propertyupdate.com.au estimates that Brisbane is more expensive to build in than any other city, as you can see in his table below:
Due to high demand from new home builders, the cost to build a house is on the rise. According to the Cordell House Price Index (shown below), construction costs have been steadily increasing over the last 5 years (www.corelogic.com.au).
Furthermore, home lending grew 44.3% in the 12 months before January 2021. That’s the biggest increase on record! Put simply, lots of people are trying to build at once, and tradies are struggling to keep up with demand (www.abc.net.au).
Rain, Wind and Hail
This steady increase is part of a long-term trend, but what about recent events and fluctuations? Late last year, Brisbane’s western suburbs (including suburbs like Springfield Lakes, South Ripley and Redbank Plains) experienced a devastating hailstorm. At least 1795 properties were pummelled by hail, leading to an estimated $805 million of roof and ceiling damage. Many houses are still without watertight roofs, and more recent storms have increased the destruction.
This has resulted in high demand for roofers, who are also an essential part of any new construction project. We’ve been told by our sources that many roofers have cancelled their employment contracts with builders and are now working on insurance jobs that pay a lot more. Not only has this affected the cost of labour (which gets passed on to you as the owner) but also timeframes for building.
What impacts the cost of your build?
When building a house, there are many factors that will add to your total cost. The type of land you purchase can affect how much it will cost you to build. If your land has a poor soil classification, lots of trees and large slope, this will add $$ to your overall build cost.
The size of your home (square meterage) will determine how much your build will cost. With a larger house, your overall cost will go up exponentially. Bigger builds mean more materials are used; you will need more labour to put the materials in place.
The type of materials you decide to use will impact the cost of your house. For example, you will always pay a premium on a steel frame house as opposed to a traditional, timber frame house. This frame is consistent throughout the entire house. If you decide on solid timber flooring instead of tiles, you will pay a premium.
If you decide to build a high-set house, it will be more expensive. High-set homes offer a greater level of space and more privacy. Bedrooms are typically located upstairs. These homes will always be more expensive than single-story homes.
Get some more information on the cost to build a house.
Who will be building your house?
The builder you select is very important to how much you will pay for your home. When researching builders, it’s not always clear how much they will cost. You need to go through the inclusions to clearly understand what you are buying.
Generally, the greatest cost for a building is labour. When designing your house, it’s important you know which things require specialised skills to install. These will add to your cost to build. Small, mosaic tiles, for instance, will take a tiler longer to install than large floor tiles.
Cost per square meter?
Cost per square meter is a unit of measurement used commonly in the building industry. This is essentially used to break down the average cost for a home per square meter.
Here’s an example: The total cost of a $350,000 house is divided by a total area of 250sqm = $1,400 per square meter.
It’s important to understand that cost per square meter has its limitations. Not all spaces are created equal; the cost per sqm for an empty room will always be lower than a kitchen. Therefore, when reviewing cost per square meter, you must compare similar houses with the same number of bedrooms, bathrooms and kitchens.
What is a Provisional sum?
A provisional sum is used by builders at the contract stage. This is an estimated cost because the builder doesn’t know exactly how much each aspect of the build will cost. The provisional costs are generally have to do with the site cost because the builder won’t know if there are things like rocks under the soil until they start excavation. Most builders will use a level of integrity with provisional sums. However, there are some that may lure people in with a low-price contract and have many provisional sums. Then once the client has committed financially, all the provisional sums add up to a huge amount.
What is a Prime Cost?
A prime cost is an amount allocated for an item that the builder cannot price because there isn’t enough clarity on a brand, model and style etc. Taps are a great example of prime costs. At the contract stage, the builder might allocate $1,500 for taps in the bathroom. As the building project gets to the fit-out section, the builder might say the taps are actually going to cost $2,000. This means that the balance has to be contributed by the homeowner.
The best way to avoid falling into this trap is to always be specific with your requirements and look out for prime cost amounts in the contract. If you haven’t been specific, the builder will only apply a nominal amount for items.
What is a Fixed Price Building Contract?
According to Master Builders Queensland, a fixed price building contract is the most common form of domestic building agreement (www.mbawa.com). As the name suggests, a fixed price building contract is an agreement where the builder agrees to complete the work at a fixed amount. This provides assurance to homeowners that costs won’t end up much higher than they started.
A builder will generally add a premium to factor in the potential risks of the job. They will also have some provisional sums for items they cannot price at the early stages.
A case study of an actual house we helped with
This property is a 3-bedroom, 2-bathroom, brick veneer, single level home with a relatively simple design. The block of land is in the south of Brisbane. Fortunately, there weren’t any major issues with the soil test. There was an issue with the wind rating, however, which added an additional $2,230 to the total cost.
The builder outlined these additional works for an increased wind rating:
- Additional frame tie-downs to suit higher lift pressure
- Additional bracing panels to be supplied and installed
- Additional roof sheeting screws
- Change to window glazing
- Change to wall frame and trusses
The overall cost for the project was $250,000 with a basic level of inclusions. The price is an actual, move-in-ready price with all inclusions. This equates to approximately $1250/square meter. You will notice that this overall price per sqm is lower than the BMT table below. This is because we have builders compete for your business to get you the best deal possible.
This is an example of a Hampton style, 4-bedroom, 2.5-bathroom, high-set home with a pool. The house was built on an inner-city Brisbane block. Most of the blocks available in the Brisbane CBD (within a 10km radius) will be knockdown rebuild splitter blocks. This brings with it challenges related to soil, and this project was no exception.
There was an additional $30,000 in site costs, which put the total cost of the project at $410,000. The inclusions with this property were at a medium to high level. The per square meter cost for this project was $1,673. You will notice that this project was substantially cheaper than the BMT average of $2,316. This is due to the competition we create among bidding developers.
Steps you need to take in building
The first step of your building journey must be speaking to your bank or mortgage broker. This will allow you to understand what your budget is.
Know exactly what you want. Now, this isn’t just specific to what type of house you want, but also to the neighbourhood, you wish to live in. Looking at the land first will stop you from falling into the trap of selecting a design that doesn’t fit the land you have selected. You should leverage a building broker at this stage to help mitigate any problems with finding a block of land and start your journey of finding a builder.
As a homeowner, you also want to understand what your house requirements are. A good question to ask yourself is: What are the things I like or dislike in my current home? This will allow you to create a list of things for your new home. At this stage, you should also go to the display home to get design ideas.
Researching builders is a crucial stage of your building journey. You need to understand what your builder will be able to deliver. Things to look out for are their folio of homes they have completed and their references. In addition to them having a good reputation, it’s important to select a builder with who you get along with. The building journey is generally between 6-12 months. If you must deal with someone you find it hard to communicate with, it may feel like a lot longer.
Your building broker will be able to help by doing the leg work for you. They have industry insights and are able to find the right builder for your project.
Comparing quotes from different builders is important. As part of each quote, you will also receive a standard list of inclusions/specifications. These documents are itemised lists of things that will potentially form part of your home.
Once a fixed price building contract has been executed by you and the builder, any further changes to the contract will need to occur through a variation. According to the QBCC, not putting things in writing is one of the main causes of building disputes. Variations need to be signed by both parties before any works can be completed. If your loan has already been approved based on your fixed price building contract, any additional costs through variations will not be covered y the loan. If there are major variations to your project, this could impact your budget.
All the above factors play a part in determining how much it will cost to build a house. According to Rider Levett Bucknall, the range was between $1,800 – $4,000. Below is a snapshot from BMT Quantity Surveyors, who have broken it down further (per house):
To get the best indication on your specific type of home, speak to your building broker. They will be able to asses your requirements and give you an overview of how much it will cost to build your home.