Why the cost to build varies around the country

“Hello and welcome back to daily buying tips, I’m Dean Berman from Berman Buys.

Today were going to talk about why the cost to build a house varies around the country.

This is from a buyers agents perspective, not a builders.

You would think to build the same house would cost the same.

But no!

Even different regions within the same state can vary in pricing.

As a buyer, it’s good to understand this information as it will help you when deciding on what to physically purchase, particularly if you intend on building.

Depending on where you build around Australia, there are a number of factors you should be aware of:

– Sloped sites are generally more expensive to build on.
– A more detailed house such as double brick will cost more than a lightweight material like weatherboard.
– Double storeys will usually cost more because of the additional work involved such as extra stairs, extra level of flooring.
– In a capital city it may be easier to source certain materials and labour i.e. whilst in a regional area it maybe really hard, making remote locations usually more expensive.
– A prime CBD location, can sometimes make for additional expenses in road closure permits and storage
– Overly complicated houses or overly dense developments can get objected by neighbours and halt the approval progress.

Demand and supply ultimately affect the cost to build.

A few demand side factors:

– A growing local GDP or economy, creates greater disposable income, enabling more households to renovate and re-build.
– Increasing property prices makes building more viable, i.e. if a project costs $500,000 and it’s worth $600,000 at the end, then more projects will get built.
– Government grants can make buying land and building houses more affordable.

A few supply side factors:

– Re-zoning changes and new land releases will put massive upward pressure on supplying houses.
– Competing industries or jobs for labourers will enable trades to charge maximum prices.
– State taxes, fees and insurances vary between states and can affect the final construction price.
– A project home builder, constructing hundreds/thousands of homes per year will generally have greater cost efficiencies than a custom builder.
– That same project home builders pricing can vary if they don’t build as much volume in another state, as they won’t experience the same cost efficiencies as in there dominant state.

According to recent figures, custom build single storey and double storey dwellings can vary around Sydney, Melbourne and Brisbane from the low end of around $1,700-$1,800/m2 to over $3,000-$5,000/m2.

If your looking to build a house make sure, you understand why you’re building it.

Is it for yourself, or for investment?

If it’s for investment, make sure you don’t overcapitalise.”

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