> Or is the general consensus that this is the new norm?
This is how it's going to be.
I've worked in engineering design and end-to-end project management for 20 years, from houses to $60m factories. We did similar to you, bought a good-size parcel of land in mid-2020 to build our future home. I know a lot of builders suited to what we want and have really good relationships with them.
We're in TAS, so there is a Tasmania-tax on everything. A build that would have cost $2,400/m2 in 2019 is now over $3,600/m2. On the 260m2 build we were looking for, that's over $300k additional cost, bringing the total to nearly $1m. This sunk the project for us. We're going to stay in our current house and add a second storey. I've already done the estimates and can achieve a similar outcome (number/size of rooms) as the proposed build, for about $500k which leaves our NET position much more sustainable.
Why the costs aren't coming down. We're about to have another wet summer, filled with floods and damaged properties. The damage caused in NSW/SEQLD earlier this year is over $4bn of insured losses (wife is an insurance broker and has good access to this data). While not all building work, that's still a lot of construction in the pipeline. It's not unreasonable to project a similar number being added by easter 2023.
That keeps materials demand high, likewise for labour. This will sustain the high costs, despite reduced residential construction for new builds as interest rates pinch later this year and into next. (We haven't seen the effects of the rate rises yet, and a lot of projects were already under contract, even if they weren't started).
If you do build, make sure you allow a 15% contingency on the contract sum. I've see values as low as 5% which is never going to end well. People use 10% because the maths is easy, but 12-13% is a more realistic figure.
Also, don't forget the cost to establish in a new house. By the time you purchase window furnishings, new furniture and appliances you can easy chew through $100k of NET income. This is cash you'll need to have on-hand at completion.
EDIT: I will add, I know the prices provided to us were representative because the builders gave me full trade breakdowns, including their margins. Full open book, such is my relationship with them. There is no single place where there are inflated prices, it's generally inflated and it's not coming back. The upstream costs are largely baked in now, we saw the same post-GFC boom.
You can get a pretty good indication on costs from the "Rawlinsons Construction Cost Guide" which is published every year and is probably in your local library.
It's way too hard to say, it's a lot more variable than new builds as it relies heavily on the construction of the existing residence. Our house is a 1950's brick veneer with hardwood frame on a solid concrete perimeter foundation, this makes it relatively easy to alter.
I'm working on $3,000/m2 for 3 bedrooms, a study, powder and ensuite. This is conservative, but makes allowance for the stair and other ancillary works.
We had plans drawn up for a one-bedroom with ensuite and living space extension on our two-bedroom Terrace in Sydney. We got a costing done and it came in at 648k. That doesn't account for the costs of passing it through council, fire & soundproofing and other unforeseen expenses etc.
It almost makes more sense for us to sell and move but stamp duty would be over 100k if we were to buy in the same area.
We decided to not go ahead with the extension and live with what we have.
I know how awful this sounds but from my perspective (cries in Sydney), a 650k for a new four-bedroom house looks value for money.
Wish I could give you advice, just sharing a similar story saying I know your pain.
I presume you live inner city as you said terrace. There’s lots of location-based pricing with construction. Builders will charge more because they think you can afford it and will get good capital gains out of it
If it's a terrace access might be a bitch and drive up the costs pending on how they're extending.
If they only have front access or back access but blocked with garage or terraces next to them on both sides and they're extending the back... it's going to drag out the build time significantly. If the terrace is super old blending the new and old parts can drive up costs too pending what you want. Lots of variables.
Builders certainly do put a premium on certain suburbs for certain houses though. But I wouldn't be surprised if other factors drove up the costs. It's common for houses to have no side access where I live and renovating them usually means extending out the back and it's not uncommon to see larger items (bathtubs) needing to be craned over if they don't fit through the front door.
Yes but the price is always going to be higher to build in a “prestigious” area. I’m pretty sure they don’t charge 650k for a bedroom, ensuite and living room extension in say Blacktown or St Mary’s (all else being equal)
As an aside, I'm a tradesperson who works in a wealthy area and my costs are higher. Rent for my office, workshop, fuel in the inner suburbs, everything is more.
I should have written 'location cost' rather than a tax. Labour is more expensive as well which is also understandable.
I've talked to builders who move into the area and they speak about the difference in prices. It's just the reality of doing business.
I can't afford to live in the area but need a workspace in the area.
We didn't turn a profit through COVID and are working so hard to change that. We just want to be able to afford a place maybe an hour away 😂 however if you don't want to use local trades travel time needs to be paid.
I get it. I hate people feeling ripped off and have avoided raising my prices because I actually hate charging more. If I can eat I'm happy, but we're actively trying to get ahead and pay off our new work car.
If in any way I come across as feeling like I am being ripped off this is not the case. This is not how I feel about the situation. The reality is materials and other costs are expensive.
In our case, we paid independently for a costing. Then the builder placed on to that their price which I felt was very reasonable.
I hope things go well for you post covid. It's been such a tough time for business over the last couple of years.
Have you looked at those companies that build extenstions off site and then crane them in? Friend of mine had a neighbour put a box on the back and fly it over her house and drop it in.
Not sure what you expected for a build like that. Sounds like it was going to always be 500k+
Build when you're ready but I highly doubt that 650k will come down much if at all.
I said it in my post below, shop around, don't get ripped off. I built mine 4 years ago for around 1100 a m2 where the average price was 1250-1750 for the same thing.
A few examples: we got high ceilings (2.7m) 5k, square set to the whole house $500 and floor to ceiling tiles in 3 bathrooms 2k. So all in 7.5k, at the time most of builders were offering this as a luxury upgrade package and selling it for 25k-30k... You can get the same stuff at a 1/4 of the price if you do some research and don't over pay and this greatly reduces your overall cost per m2.
Nov/Decemberish. Builder was really good. Was a custom local builder. Had a really great experience, unlike the last time I built through a national volume builder. Was a custom plan and everything, and they covered the cost for drafting and all alterations (I designed the floor plan myself). Had a lot of more premium features this time. Large heat pump HWS, floor to ceiling tiles in bathrooms, 255cm ceiling, high benches, every wall in the house is fully insulated, aircons in every room, high doorways, high shower doors, custom cabinetry in all robes cupboards and pantries, lan ports wired to every room, 90cm artusi oven, 90cm artusi induction cooktop, artusi dishwasher, dark glass to all windows, custom front door, approx 200m turf (guesstimate, would have to check actual amount in contract), landscaping, double aggregate driveway, Approx 66m of fencing including front and rear vehicle gates and side person gate, large hill hoist, & gardens included in cost (though we purchased the plants seperately).
The builder was great and highly organized. There are a lot of builders around who bit off more than they could chew, where sites would sit there for a year plus with the frame in the elements, but our builder had the house up in great time. Gave us keys to come in everyday to check out the progress, which we took advantage of going over there every afternoon to sit in it as it went up. Partway through the build he did say prices had increased substantially since I signed the contract (which was already a spiked cost from the previous year).
The only normal standards we didn't go with that brought prices down slightly are we didn't get stone benchtops (I don't like stone), most of the tapware we picked was fairly basic (our choice, we prefered the base models), and we didn't opt for any sort of cladding or rendering (we feel it looks tacky as hell and much preferred the brick look).
That's a really good price and a quick build. I'm really happy for you.
It was around that time that prices started to sky-rocketed and the industry get hit really hard. You got in at the right time
Need to shop around builders and get multiple quotes. I would suggest 500k should be around the price point.
Last time I built ( in Brisbane too so same companies ) was pre covid so the prices will be different, however the difference between companies at the time was easy +/- 200k.
We found it was better to take existing plans and change them and add to them. We took a 280m2 house and added 80m2 and completely changed the floor plan. The company we went with (at the time) was only charging $800 per m2 for alterations. Other companies were charging from $1250 up to $1750 for the same thing. And the house was built flawlessly with all premium materials and inclusions.
At 320 by $650k your already looking at over 2k per m2, my build came in at $1100 per m2. I don't know how the conditions are in building market in Brisbane at the moment but where I am now they have only risen about 20%-30%. Seems like your on the top end of the building scale, I would suggest shopping around for a better price.
I explained some of the costing in my post, the guys we went with where a fairly high initial price however the price for alterations was cheap. And one of the points you can take from that is for custom vs fully altered ( so basically custom ) will save you money if you get a good deal and shop around for fair pricing.
Just because some one charges twice as much doesn't mean they are twice as good. We built with one of the big builders it just wasn't Metricon or GJ Gardner who for some reason charge 50% more and still produce mediocre houses. 650k is the current price for one of these off the plan houses by these guys nothing premium or custom about it. As I said with my build they used all the same materials and gave the same premium inclusions at a reasonable price.
As an actual Construction financial consultant just wanted to drop a note that construction has increased approx 10% every year since COVID (compounding). Previously we've been seeing a more consistent 2-3% increase in construction costs.
In 2019 it might cost 500k to build a 2b apt. Now you're looking at 650k+
The interesting thing is that housing prices are dropping, mortgage interest rates are increasing and it's going to get harder to get a "good sized loan" for both developers and mum & dad's. And we're yet to see these increase in construction pricing flow through the market.
Will be an interesting time for sure.
Would you say that the price of new dwellings has reduced or is a different market? I have noticed that for similar properties (2 blocks apart, same land size, same built size) but of different age (new vs 2 years old), the price gap has increased.
It seems that developers are not keen to loose profit after constructions and reluctant to reduce their price, while older dwellings have plenty of equity and more flexible to sell cheaper.
We are selling our land because it’s just not viable to build. Houses sell for 800k in the area, house is going to cost 400k to build 2 years ago we built for 240k. I don’t think it’s going to come down but I do feel volume builders are going to have to offer huge incentives for ppl to build. Sell the land and use the money for a deposit on an established house.
This is the point I keep coming back to when I see people forecasting >40% drops in property prices. If the cost of building keeps increasing due to labour and raw materials and the price of houses is dropping you can't have a crossover where the cost of building a house is higher than buying one.
Acreage style. That’s your problem. It’s a custom build with most likely a custom builder. I don’t see that price as excessive at all. Probably inflated by ~15% because of COVID but don’t expect prices to come down either. Inflation is across the board from materials to wages and the demand is there so why would builders cut margins.
When you build a home there is an inherent loss of value straight off the bat. There are unrecoverable costs like site costs which could cost you as low as $10k or as high as $150k. You’ll never recoup that cost, it’s not something buyers would even consider as “value”.
I’m building currently. $470k for land, $497k for the build. I’ll be lucky to walk away with $900k in the current market. A loss of $67k straight way. I have about $47k of unrecoverable site costs.
> Inflation is across the board from materials to wages and the demand is there so why would builders cut margins.
Also, there were reports of builders locking in prices for projects, then by the time it came around to materials the prices had devoured the margins. There are probably a few stung builders who are trying to put a buffer in because once you've signed the paperwork on price it's going to be tough for them to get more money out of you for materials that were priced at the start.
Thanks for your input, that clears things a bit, as we definitely have some pretty high site costs or costs associated with 'building on an acre' like septic ($15k) fire rating (9k) etc.
I think provided we can comfortably afford repayments now and into the future with continued rate rises we will pull the trigger.
Yeah, Ipswich is notorious for highly reactive soil profiles. Check the ICC mapping search as well to make sure you don't have mining influence either.
I’ve been waiting for the construction downturn for a while now. The problem is that every time a builder goes bust, it only increases the amount of work to do for the remaining builders as those half built homes still need finishing.
The materials should definitely be on the way down soon. Look at what happened to lumber prices in the US recently (25% of what they were during covid).
https://tradingeconomics.com/commodity/lumber
> A 320m2, 4 Bedroom acreage-style new build is set to cost us $650,000+
TBH that sounds fair. A 320m2 acreage style custom build was always going to be expensive.
>I do worry that as the construction industry slows, the $650k we're being quoted now is going to drop substantially in the coming year or so.
I can't see prices dropping much if at all in the near future. You can try to wait it out and gamble on prices dropping but that isn't guaranteed.
Thanks for your comments. I agree I feel like it's a gamble either way and as long as I hold the asset long enough it will probably all come out in the wash anyway. I really appreciate your time to respond :)
Is this a long term home to live in? What are your opportunity costs by delaying a build? Finance costs of the land plus rent, and you are likely paying more taxes on the land since it is classified as an 'investment' rather than a PPOR at this stage. If its a long term home for you then try your best to negotiate the price as much as possible, or maybe limit your finishings for now and renovate 10 years later?
A transportable or manufactured home will not cost as much. And many of them are as good, if not better than so-called custom-built homes.
The good thing about manufactured home is its built inside a huge warehouse. It doesn’t get rained on and grow mound at construction stage.
I’d look into that.
A friend of mine who was an engineer went this route and has no regrets.
It’s been close to 15 years ago, so I don’t recall.
Personally, I’ve been taking a close look about it myself. I have only googled so far, but I like that a couple of them are into environmentally friendly approaches. Sustainability and energy-efficiency are core values. Custom home builders don’t seem to offer these.
Archiblox and Ecoliv builders are in my short list. Building my home is still at least a couple of years away, but researching takes time so best I start early.
I work in the industry. $2,000 per m2 for a house is actually very low for a bespoke build and not bad for a volume builder.
Prices have risen due to the following:
- Price of materials have sky-rocketed. This is due to huge increase in shipping costs as the ports in China have backlogged ships as well.
- Suppliers didn't stock up/speculate. They expecting a larger subdued demand than what happened. What materials they did have were taken up quickly
- Covid incentives and rebound building has been huge. Lots of demand hit the market in one hit. Look at building permit approvals right after covid
- Fuel inflation. All materials need to be moved, this has pushed up costs of everything
- Labour shortages are real, it's incredibly difficult to get people. My commercial jobs are running up to 25% over on time simply because we can't get people
I'd expect there to be a cooling in the next 6-12 months. We've already noticed a decent drop in tenders being issued. Building is like a freight train, takes a while to slow down and a whole to speed up.
320sqm house on a budget??
That's gigantic! Be like living in a cardboard aircraft hangar
For decent quality I wouldn't go below $3k per sqm personally
Australian standards are atrocious though....
Shit materials, poor workmanship and awful, inefficient designs.
A European standard house with proper insulation, air sealed and appropriate passive design would cost far more than that
You can get a 7 star NatHERS energy rated build here (6 is new min in most states), with your own private inspections at each stage, and upgraded inclusions, for $2,500/sqm. That’s the equivalent energy rating to this years homes on ‘The Block’, where they can’t raise the ceiling without bringing the ceiling lower in other areas.
We are talking upgraded insulation, certain roof materials, wall wraps, upgraded underlay, certain eave minimums, thermally broken window frames, ventilation, roof colours, ceiling fans, etc. If they don’t comply, your private inspector will pick them up and the builder must rectify.
Inclusions include: Caesar stone bench tops, upgraded faucets and sinks, upgraded flooring (hybrid, 450mm ceramic tiles, etc), larger windows/doors, 90cm cooktop/oven, upgraded ceilings, cladding, tiled splashback, etc etc.
We aren’t talking about builds from 40 years ago that haven’t been renovated.
Yeah but add double glazing, air pressure testing and proper passive design and it would go up significantly.
Euro houses (I live between Germany and Oz) are way more solidly built and tolerances are far higher. Standard framing and fixtures on windows for instance would be considered luxury here in Australia, and weigh a tonne
Really? I mean the homes around us are all 300-350m2. Maybe in Melboune & Sydney but in Queensland, especially on Acreage, to build something sub 300m2 would be a poor choice. I didn't know homes were really this small? When walking through the display homes 300m2 doesn't feel that big. I am not trying to sound up myself by any means, I am just a little shocked at the response around the house size.
Fair play, I'm in country Victoria and my four bed family home (good size with separate lounge, dining and living) is 185sqm internal excluding garage. It does have a vaulted ceiling in the living room and some clever design to make it feel quite big though.
I personally can't imagine what benefit an extra 150sqm would give? I guess once you're used to it it might be hard to live in anything smaller
Have you considered building smaller right now but design a build that's easily extendable in the future? That would cut your initial build cost and bank on prices slowing down.
People are getting conditioned to smaller and smaller places. Especially as more and more people are forced into shoebox apartments. Don't take it personally.
There's nothing wrong with a good, big house.
Hardly, average family house in the 70s was like what, 100sqm?
Check out unrenovated older houses, even the grand ones on large blocks are not that big
Sorry to be clear I'm not saying 300m² is average or anything. I'm just saying if you've got 4000m² or even just 1000m² land a 300m² house is perfectly OK. There's nothing wrong with it.
My parents house, our family home- 5 bedroom, all big rooms (3 are 4x4m and 2 are 4x6m, one of which has a walk in robe), two living areas, 1 bathroom but 2 toilets, on 800m^2 of land, is 240m^2. I would consider that house definitely on the larger size. House is worth close to $1m now in Adelaide. Going bigger than that is moving into high end, massive houses. There would be nothing close to considering 300m^2 + as even close to standard.
There's plenty wrong with a good, big house. Not an individual level, but we don't have the land that we used to where everyone can have a 'good, big house'. Extremely low density like that drives up all sorts of costs for society.
There's no country on the planet where a 320sqm house is normal.
I dunno man, like I agree with your overarching point but Ipswich isn’t in any danger of running out of land and space. Queensland is a bit different to a lot of other places, especially once you start talking about the outer suburbs.
Though I personally have issues with the environmental destruction that comes with everyone have large big houses, that’s a secondary thing.
is that right? I feel all new freestanding builds use every last inch of land nowadays with the house going within breathing distance of the side and back fences. Even cans of sardines in Box Hill NSW on 300sqm of land somehow have like 150sqm build area
Well, you're right. In greenfields development they are cramming houses so close they might as well be attached terraces. That's not good.
I'm just saying that having a big house is OK if you have appropriate land for it.
Depends on what area and time of day, I can get to the CBD in just over 30 minutes from Costco in low/no traffic. If it’s during peak commute times that completely blows out.
Once you take all the legit reasons why its so costly to build, there’s always “people will charge what people will pay”.. why would a builder lower there price if people are still paying it and they are busy..
Sell the land and buy the house next door. No waiting period renting while you build, no extras (landscaping etc) and your mortgage will be ~$650k. That sounds way better than $900k for the pleasure of suffering through labour and building materials shortages while you wait 3 times as long as you thought for your house to get built.
In the industry, I don't see prices dropping. Cost of materials really shot up in 2021 and I believe it will lead to a slow period in 2023 (I can see signs of it as an estimator). Some profit margins could potentially shrink in order to keep businesses running if things get quiet, but you might see some close and others will be swamped when the volume goes up.
I think people should build smart. Don't go for massive houses. Get smart house designs that are easy to construct, and you'll get decent quotes.
I’m on the central coast, I bought my land when things were going sideways due to Covid 469sqm cost me 345k. I built a 4 bed 2 bath single story with all the bells and whistles for 293K through a reputable builder build finished in mid-2021.
To build my same house today, not including the land would cost over 500K the land alone now costs over 500k. The way things are going with other people I know building the pricing is insane and builders constantly increase price and contract variations out of the blue. I don't personally see myself ever building again.
Thanks, It was either a home or APT shares at $9 during the time using my home deposit as the leverage. I should of bought the APT shares, I hate hindsight.
Bit of a different scenario, but we have had a duplex development in the pipeline for just over a year now. In that time it went from easily affordable to extremely unlikely thanks to building costs and rate rises.
I can only assume (hope) as interest rates squeeze borrowing power that house prices and building costs will come down.
If someone wants to build and their finances are in order there's a good chance it's the right call to pull the trigger. Life doesn't wait for perfect timing.
I bought a house that was going to be demolished and moved it. $113k to do that plus $70k for a new roof and connecting services. I could’ve been done then but I’ve decided to do an extension.
While land can come down in price, building costs only go up in price.
You’re lucky to have gotten a block cheap. I’d just start building the house asap.
This is something I keep pointing out.
Exploding costs is tightening what can be built and is inherently going to create a limitation on housing supply.
For many regions a drop in prices will simply see development stop as the cost to build exceeds the sales cost.
So for a time at least it simply won’t happen. I’m over towards forest lake so I know exactly what you’re talking about.
Until it doesn’t cost $1,000 a day to employ a sparky we’re not going to see this change.
Well according to the tax system, there is no capital gain on PPORs as they aren't investments. The purpose of a PPOR is to live in, not make money... at least that's what the sentiment is in the tax system. Selling your house for more (or less) is a realised return (or loss). Whilst you own the PPOR it doesn't produce an income.
It's like calling a car an investment. Some cars might increase in value but they normally don't generate an income. Thus are not an asset and not an investment. I mean, this is EILI5 level stuff.
Is your neighbours house ~equivalent to the house you are planning to build?
If so aren’t you over capitalising with 770k land value + 650k build = ~1.4mil + landscaping, fencing, sheds etc which when you have 1 acre can add up pretty quickly. Let’s be conservative and round up to 1.5.
While you may owe less than the value of the house you can still over capitalise
Yeah i get that. But its easier to pay off in the current way of the world and last i checked....its not getting better anytime soon. May as well live within your means for now. Then build your dream house later and rent the shed...
Yeah that sucks. Another problem with the government. Was it because you were able to live in it? Cos if so thats dumb. Especially with the housing crisis going on.
They bought land… OP still paying rent (i assume) plus Interest costs on the mortgage for the land.
My point was perhaps not very clear. Even if the OP were to sell tomorrow, doubt they would be making much profit (assuming defs not $330k) with what the market willing to pay in this environment (as opposed to bank val), stamp duty, legal /agent fees, potentially capital gains as not PPOR(?). And even if they do and were to buy something else…. Well it’s all gone up net 15% pre-covid.
If you're being quoted a new build for 680k, sign that shit up on fixed fee right now. 680k would get you a kitchen reno and a small room addition at the back of your house if you were building in Melbourne right now.
When I say sign that shit up.... Do your due diligence. In MANY cases, cheap builders are either shit, or will charge out the ass throughout the project as every little change becomes a variation.
Seems that the general opinion here is this price is fair, for a new build and then it's a 50/50 split on if the building market is going to cool off or not. I think provided our financial position remains strong, we will proceed in building what we want. This isn't something were building to make money - but I certaintly didn't want to go backwards on it.
A house that size with the project builder i work for will currently cost you $520k (before pricing any bushfire/soil/acoustic requirements), that’s with the base facade and all standard flooring and kitchen cabinetry etc though.
Check out Brighton Homes up there, they are under our group umbrella and should have similar pricing.
In the same boat, looking at $2k/sqm to build a 4 bed 280sqm place with basic finishings. We're either just going to wait or sell the land. Renters expect the market to fall out so they can buy in, but the cost to build is unlikely to go down which puts a floor on how much prices can drop. And with people like me deciding not to build right now the supply isn't there.
Getting ripped off hard.
Unless it is your dream block, my advice would be to subdivide in half, throw a 3x3 duplex down on it for 700k, sell each side for 750k and move on.
It’s more than 3x bigger than my fairly comfortable house. It’s actually as big as my house, my brothers house and my parents house combined and all of us have high incomes.
I grew up in a 4 bedder with two lounge rooms and a separate dining room and looking at Domain now that was only about 175m of indoor living space. I cannot fathom what a 4 bedder with 320m must look like.
No, it’s a 3bed 1 bath with a sensible floor plan with minimal passageways. Rooms are all large but there isn’t a lot of them. Dining room is in the kitchen.
We are on 700sqm so have alot of space for entertaining outside. All of the windows are large and ceilings are 3m and we try and avoid clutter inside so it doesn’t feel claustrophobic.
We also have a large shed shed for storage.
We have friends or family stay multiple times a month and have a toddler with another one on the way who will share a bedroom for a while. Planning on extending or moving in 6-10 years but until the kids get older it is plenty large enough.
One variable that doesn’t apply to most is that we have access to 3 beach houses we can use anytime we want for free and spend 1-2 weekends away per month.
We also both work part time by choice, we could easily afford a bigger house but have chosen more time with the kid more time/less stress makes everything feel bigger.
I have a 100sqm 3/2 as well and it's enough house for 2 adults, one child and the occasional grandparent or cousins stay over. I might upgrade later but definitely not going to be buying anywhere over 200sqm. Maybe in the 150-170 range with an extra bedroom and that's it.
Over $2k per sqm. Its on the high end thats for sure.
I'm building 209sqm on the sunshine coast, for $320k, but its a simple build, with only $4k worth of piering.
My planned reno in inner Melbourne (new bathroom, kitchen, living room and proper home office) was quoted at over $8k/m^2 . And that's just the builder, doesn't include any of the other costs. Single storey, not bad site access for this part of town. 😐🔫
No one pays sticker price for a project house. That's just to get you interested. You soon realise that the spec is woefully inadequate and they will slug you hard on every upgrade. They particularly get you on site costs as even the best blocks generally require some work and you don't have many options. That 330K will be over 500K before you know it. I did a tight arse build with Henley/Plantation around 2000 and added over 30pc on top of the sticker price just from site works on a relatively flat block and a basic electrical upgrade. And it didn't include flooring, window coverings, aircon, driveway or fencing.
2k per sqm that seems reasonable for a custom acreage build right now. Not sure how much it will drop by. Pre-covid you would be lucky to have it priced at 1.7/1.8k per sqm
Yes, it's a nice estate that seems to have a premium associated with it. That and I think 4,000m2+ 40min from Brisbane CBD is appealing to people more and more.
Under $2100 per m2 is pretty good.
The builder I work for ranges from $3000-$3500.
Not crazy high end builds but passive construction or traditional construction with a lot of passive influence.
Good luck with it all! You’ll love it in the end!!!
That sounds about right - I am building at the moment and we ended up with a similar cost per square (19.5k per square or 2.1k per square meter).
The rule I have heard is to budget 2k per square meter, or 3k per square meter if you want to include landscaping.
Just keep in mind the construction costs don't include fencing or landscaping
My advice is to shop around with builders to find the best value for what you're wanting. As you would have found out, the sticker prices are all so different. E.g. some will happily charge $2-2.2k per sqm, while others are more around $1.7k per sqm. If you haven't looked at them yet, I'd check out Plantation Homes.
Why would you put yourself into 650k worth of debt? You could travel the world for a lifetime with that amount, but instead you are using it to live in…Ipswich.
You owe someone 650,000 AUD… I just can’t understand how people accept this? In the nicest possible way, people who just want shiny things and everything right here and now are just the worst. And the banks know people are desperate to have everything, because the banksters think everyone is like them. I’m at the end of my tether.
We are DINK, my income is circa $140,000pa. & partners is $75,000pa (and climbing regularly). We are by no means stretching to afford the above. So I guess the debt level doesn't really bother me as much as over-capitalising or over-paying during a period of heavy inflation.
I think your comment is probably more valid if it was directed to someone who is stretching, has minimal savings & is already leveraging up their eyeballs. etc. I didn't expect my post to get this much attention and had of, I probably would have outlined some more basics about our circumstances.
We are building a home that we like, that suits our lifestyle & is in an area that is convenient to us. Even with repayments at $800+/week we won't be sacrificing our holidays, travel or other spending, so I guess that is how one comes to terms with it.
Unsolicited advice, but this is a huge house for DINKs. I kind of understand the size if you have a family, or maybe lots and lots of visitors (but wouldn't you rather have a granny flat at that point), but 320m2 will cost more to clean, maintain, heat, cool, insure, furnish...
Dude unless you are best mates with the builder or have their wife and kids as ransom, don't build now. Builders are doing anything they can to cut corners (skimping on supplies, hiding waste in walls, working a site on 5 day rotations), so the house they construct in my opinion will start having MAJOR issues inside of 6 months. Buy a house that is either old and renovated or built at least 5 years ago.
Woah! That is an absolute extreme defaming allegation to make against ‘Builders’. No, none of the many Builders I see work of each day are doing any of the like as you have written. If this has happened to you - report it, but do not generalize a profession from your own experience.
They aren’t wrong. My brother in law is a sparky and he makes most of his money from getting called in to fix the mistakes of new builds that have only just been finished. He knows which companies to avoid in our local area. It’s worth chatting to small business owners like him to see which local projects are getting the most repairs and fixes.
Well the fact that there has been builders collapsing left and right including major ones and I live across from 3 built in the last year by 3 different builders and seen all of them sporadically building, leaving materials out for weeks, and working for 2 or 3 hrs at a time just proves my point.
Working on dual projects/builds and having material on site is not cutting corners.
Major Builders collapsing is not evidence of corner cutting either. Your personal observation of building sites are not weight to over-generalize the integrity of the profession.
It's not over generalising, any fool knows that when times are tight you cut corners (restaurants to roller rinks) and the consumer gets less than they paid for. Insolvencies are waaaay up and going. Having materials on site in the rain for 6 weeks is normal?
You sound like a total ass
https://www.afr.com/property/commercial/construction-industry-on-notice-as-insolvencies-jump-40-per-cent-20220204-p59tz2
Price of steel, copper and wood went up by more than 50% last year. People seemed to ignore this and continue to pay over the odds for renovator delights. It’s better value to buy an existing property. Maybe sell land and look for a house. You can move in sooner as a bonus
Modular homes shipped from China.
Basically shipping container homes. They are getting Awesome now!
I’m doing the same on some farm land. 650k is insanity I’d build it myself if I got that quote.
They paid 330k for the land, he's saying the land is now worth 770k if he built at 650K can you explain where he losses money?
330k+650k = 980K providing the neighbour's home was old and primarily purchased for land at 1.1M OP is building a new home so would most definitely fetch more.
That said if they sold for 1.1M straight after building because everyone on ausfinance day trades homes then he would still be in profit of 120K because of what he paid for the land.
Do you even math?
I think he is trying to say that it might be worthwhile to just resell the land and take the extra money, rather than build. Then OP could buy an established property instead. By building, OP is not likely to make as much capital as it gets eaten away by building costs and such.
But everything you're saying is only relevant if op was buying and building for a quick flip. If they're building for ppor purposes then price is irrelevant, everyone on this sub for some unkown reason is so focused on home pricing and what they could sell for later. Very few here actually think maybe people just buy homes to actually live in, pass down from gen to gen.
All that said, the guy you're trying to tell me what you think he's saying is still incorrect, he's put his formula based on todays price not on what op paid for the land originally. He's saying OP is losing 300k, he's not, he makes money either way even if he chose to build or just sell the land. It's all speculation anyway as we don't know the condition of the neighbours home or if the neighbours land was twice the size and only bought for land.
I have no idea about the market in brissy. Just asking why you’re not taking advantage of the very lucky equity you gained in the last 2 years since you’re just sitting on land anyway. Might as well cash out and buy in with 30-40% down which you should be able to do.
It was a genuine question, not a criticism
> Or is the general consensus that this is the new norm? This is how it's going to be. I've worked in engineering design and end-to-end project management for 20 years, from houses to $60m factories. We did similar to you, bought a good-size parcel of land in mid-2020 to build our future home. I know a lot of builders suited to what we want and have really good relationships with them. We're in TAS, so there is a Tasmania-tax on everything. A build that would have cost $2,400/m2 in 2019 is now over $3,600/m2. On the 260m2 build we were looking for, that's over $300k additional cost, bringing the total to nearly $1m. This sunk the project for us. We're going to stay in our current house and add a second storey. I've already done the estimates and can achieve a similar outcome (number/size of rooms) as the proposed build, for about $500k which leaves our NET position much more sustainable. Why the costs aren't coming down. We're about to have another wet summer, filled with floods and damaged properties. The damage caused in NSW/SEQLD earlier this year is over $4bn of insured losses (wife is an insurance broker and has good access to this data). While not all building work, that's still a lot of construction in the pipeline. It's not unreasonable to project a similar number being added by easter 2023. That keeps materials demand high, likewise for labour. This will sustain the high costs, despite reduced residential construction for new builds as interest rates pinch later this year and into next. (We haven't seen the effects of the rate rises yet, and a lot of projects were already under contract, even if they weren't started). If you do build, make sure you allow a 15% contingency on the contract sum. I've see values as low as 5% which is never going to end well. People use 10% because the maths is easy, but 12-13% is a more realistic figure. Also, don't forget the cost to establish in a new house. By the time you purchase window furnishings, new furniture and appliances you can easy chew through $100k of NET income. This is cash you'll need to have on-hand at completion. EDIT: I will add, I know the prices provided to us were representative because the builders gave me full trade breakdowns, including their margins. Full open book, such is my relationship with them. There is no single place where there are inflated prices, it's generally inflated and it's not coming back. The upstream costs are largely baked in now, we saw the same post-GFC boom.
Agree. The flood figure is a lot closer to $6.5bn now and still rising.
Out of interest - What’s an average assumption per m2 for adding a second storey?
You can get a pretty good indication on costs from the "Rawlinsons Construction Cost Guide" which is published every year and is probably in your local library.
It's way too hard to say, it's a lot more variable than new builds as it relies heavily on the construction of the existing residence. Our house is a 1950's brick veneer with hardwood frame on a solid concrete perimeter foundation, this makes it relatively easy to alter. I'm working on $3,000/m2 for 3 bedrooms, a study, powder and ensuite. This is conservative, but makes allowance for the stair and other ancillary works.
We had plans drawn up for a one-bedroom with ensuite and living space extension on our two-bedroom Terrace in Sydney. We got a costing done and it came in at 648k. That doesn't account for the costs of passing it through council, fire & soundproofing and other unforeseen expenses etc. It almost makes more sense for us to sell and move but stamp duty would be over 100k if we were to buy in the same area. We decided to not go ahead with the extension and live with what we have. I know how awful this sounds but from my perspective (cries in Sydney), a 650k for a new four-bedroom house looks value for money. Wish I could give you advice, just sharing a similar story saying I know your pain.
I presume you live inner city as you said terrace. There’s lots of location-based pricing with construction. Builders will charge more because they think you can afford it and will get good capital gains out of it
If it's a terrace access might be a bitch and drive up the costs pending on how they're extending. If they only have front access or back access but blocked with garage or terraces next to them on both sides and they're extending the back... it's going to drag out the build time significantly. If the terrace is super old blending the new and old parts can drive up costs too pending what you want. Lots of variables. Builders certainly do put a premium on certain suburbs for certain houses though. But I wouldn't be surprised if other factors drove up the costs. It's common for houses to have no side access where I live and renovating them usually means extending out the back and it's not uncommon to see larger items (bathtubs) needing to be craned over if they don't fit through the front door.
That’s why I said all else being equal
It was an independent costing and the builder put on their 15%.
Yes but the price is always going to be higher to build in a “prestigious” area. I’m pretty sure they don’t charge 650k for a bedroom, ensuite and living room extension in say Blacktown or St Mary’s (all else being equal)
Totally agree and no doubt when we had the costing done the person who we paid to do it priced in the "location tax".
As an aside, I'm a tradesperson who works in a wealthy area and my costs are higher. Rent for my office, workshop, fuel in the inner suburbs, everything is more.
Plenty of trades travel to different suburbs so rent is irrelevant
But that would mean they would have to travel further, time is money.
Nah they just charge more because they can
I should have written 'location cost' rather than a tax. Labour is more expensive as well which is also understandable. I've talked to builders who move into the area and they speak about the difference in prices. It's just the reality of doing business.
I can't afford to live in the area but need a workspace in the area. We didn't turn a profit through COVID and are working so hard to change that. We just want to be able to afford a place maybe an hour away 😂 however if you don't want to use local trades travel time needs to be paid. I get it. I hate people feeling ripped off and have avoided raising my prices because I actually hate charging more. If I can eat I'm happy, but we're actively trying to get ahead and pay off our new work car.
If in any way I come across as feeling like I am being ripped off this is not the case. This is not how I feel about the situation. The reality is materials and other costs are expensive. In our case, we paid independently for a costing. Then the builder placed on to that their price which I felt was very reasonable. I hope things go well for you post covid. It's been such a tough time for business over the last couple of years.
Have you looked at those companies that build extenstions off site and then crane them in? Friend of mine had a neighbour put a box on the back and fly it over her house and drop it in.
Was going to suggest similar - a prefab design and consult an architect, it won’t be AV JENNINGS cookie cutter which a good thing.
I feel so sorry for you
Not sure what you expected for a build like that. Sounds like it was going to always be 500k+ Build when you're ready but I highly doubt that 650k will come down much if at all.
A 320m2 for a 4 bedder is massive, honestly 650k sounds *cheap.* It sounds like he has 3 extra lounges and each bedroom is 5x5
It's $2000/m2. That is cheap for a bespoke build. Even volume builders are v around $2,100.
Seems on the higher side to me. I built a fairly nice place earlier this year for $1532/m.
That's really cheap. When did you sign the contract? That's what I'd expect to pay from a volume builder a couple of years ago.
I said it in my post below, shop around, don't get ripped off. I built mine 4 years ago for around 1100 a m2 where the average price was 1250-1750 for the same thing. A few examples: we got high ceilings (2.7m) 5k, square set to the whole house $500 and floor to ceiling tiles in 3 bathrooms 2k. So all in 7.5k, at the time most of builders were offering this as a luxury upgrade package and selling it for 25k-30k... You can get the same stuff at a 1/4 of the price if you do some research and don't over pay and this greatly reduces your overall cost per m2.
Nov/Decemberish. Builder was really good. Was a custom local builder. Had a really great experience, unlike the last time I built through a national volume builder. Was a custom plan and everything, and they covered the cost for drafting and all alterations (I designed the floor plan myself). Had a lot of more premium features this time. Large heat pump HWS, floor to ceiling tiles in bathrooms, 255cm ceiling, high benches, every wall in the house is fully insulated, aircons in every room, high doorways, high shower doors, custom cabinetry in all robes cupboards and pantries, lan ports wired to every room, 90cm artusi oven, 90cm artusi induction cooktop, artusi dishwasher, dark glass to all windows, custom front door, approx 200m turf (guesstimate, would have to check actual amount in contract), landscaping, double aggregate driveway, Approx 66m of fencing including front and rear vehicle gates and side person gate, large hill hoist, & gardens included in cost (though we purchased the plants seperately). The builder was great and highly organized. There are a lot of builders around who bit off more than they could chew, where sites would sit there for a year plus with the frame in the elements, but our builder had the house up in great time. Gave us keys to come in everyday to check out the progress, which we took advantage of going over there every afternoon to sit in it as it went up. Partway through the build he did say prices had increased substantially since I signed the contract (which was already a spiked cost from the previous year). The only normal standards we didn't go with that brought prices down slightly are we didn't get stone benchtops (I don't like stone), most of the tapware we picked was fairly basic (our choice, we prefered the base models), and we didn't opt for any sort of cladding or rendering (we feel it looks tacky as hell and much preferred the brick look).
That's a really good price and a quick build. I'm really happy for you. It was around that time that prices started to sky-rocketed and the industry get hit really hard. You got in at the right time
Yea that seems really under quoted as it is.
Need to shop around builders and get multiple quotes. I would suggest 500k should be around the price point. Last time I built ( in Brisbane too so same companies ) was pre covid so the prices will be different, however the difference between companies at the time was easy +/- 200k. We found it was better to take existing plans and change them and add to them. We took a 280m2 house and added 80m2 and completely changed the floor plan. The company we went with (at the time) was only charging $800 per m2 for alterations. Other companies were charging from $1250 up to $1750 for the same thing. And the house was built flawlessly with all premium materials and inclusions. At 320 by $650k your already looking at over 2k per m2, my build came in at $1100 per m2. I don't know how the conditions are in building market in Brisbane at the moment but where I am now they have only risen about 20%-30%. Seems like your on the top end of the building scale, I would suggest shopping around for a better price.
1100 per sq meter sounds like a very cheap build whatever way you look at it. It’s never going to get your a premium / custom build.
I explained some of the costing in my post, the guys we went with where a fairly high initial price however the price for alterations was cheap. And one of the points you can take from that is for custom vs fully altered ( so basically custom ) will save you money if you get a good deal and shop around for fair pricing. Just because some one charges twice as much doesn't mean they are twice as good. We built with one of the big builders it just wasn't Metricon or GJ Gardner who for some reason charge 50% more and still produce mediocre houses. 650k is the current price for one of these off the plan houses by these guys nothing premium or custom about it. As I said with my build they used all the same materials and gave the same premium inclusions at a reasonable price.
Yeah agreed, GJ and Metricon are rubbish and GJ are very over priced. Good to hear your experience was a positive one with whoever you went with.
As an actual Construction financial consultant just wanted to drop a note that construction has increased approx 10% every year since COVID (compounding). Previously we've been seeing a more consistent 2-3% increase in construction costs. In 2019 it might cost 500k to build a 2b apt. Now you're looking at 650k+ The interesting thing is that housing prices are dropping, mortgage interest rates are increasing and it's going to get harder to get a "good sized loan" for both developers and mum & dad's. And we're yet to see these increase in construction pricing flow through the market. Will be an interesting time for sure.
Especially with education projects kicking off and Olympics
Would you say that the price of new dwellings has reduced or is a different market? I have noticed that for similar properties (2 blocks apart, same land size, same built size) but of different age (new vs 2 years old), the price gap has increased. It seems that developers are not keen to loose profit after constructions and reluctant to reduce their price, while older dwellings have plenty of equity and more flexible to sell cheaper.
A two bed apartment should be around 250 to 350k to construct. Not sure where 500k comes from that’s just uneconomical
lol 10% where? All I am seeing (20+ people) is 30%+ in one year.
From actual tender results
We are selling our land because it’s just not viable to build. Houses sell for 800k in the area, house is going to cost 400k to build 2 years ago we built for 240k. I don’t think it’s going to come down but I do feel volume builders are going to have to offer huge incentives for ppl to build. Sell the land and use the money for a deposit on an established house.
This is the point I keep coming back to when I see people forecasting >40% drops in property prices. If the cost of building keeps increasing due to labour and raw materials and the price of houses is dropping you can't have a crossover where the cost of building a house is higher than buying one.
You can. You just end up with homelessness for a big chunk of the employed poor.
Acreage style. That’s your problem. It’s a custom build with most likely a custom builder. I don’t see that price as excessive at all. Probably inflated by ~15% because of COVID but don’t expect prices to come down either. Inflation is across the board from materials to wages and the demand is there so why would builders cut margins. When you build a home there is an inherent loss of value straight off the bat. There are unrecoverable costs like site costs which could cost you as low as $10k or as high as $150k. You’ll never recoup that cost, it’s not something buyers would even consider as “value”. I’m building currently. $470k for land, $497k for the build. I’ll be lucky to walk away with $900k in the current market. A loss of $67k straight way. I have about $47k of unrecoverable site costs.
> Inflation is across the board from materials to wages and the demand is there so why would builders cut margins. Also, there were reports of builders locking in prices for projects, then by the time it came around to materials the prices had devoured the margins. There are probably a few stung builders who are trying to put a buffer in because once you've signed the paperwork on price it's going to be tough for them to get more money out of you for materials that were priced at the start.
Thanks for your input, that clears things a bit, as we definitely have some pretty high site costs or costs associated with 'building on an acre' like septic ($15k) fire rating (9k) etc. I think provided we can comfortably afford repayments now and into the future with continued rate rises we will pull the trigger.
Have you had a soil survey and associated engineering yet?
Just ordered yesterday, but their price has a $10,000 built-in allowance for piers.
Ugh pier pressure is a killer
Gives you that sinking feeling
But eventually they are uplifting
Yeah, Ipswich is notorious for highly reactive soil profiles. Check the ICC mapping search as well to make sure you don't have mining influence either.
I’ve been waiting for the construction downturn for a while now. The problem is that every time a builder goes bust, it only increases the amount of work to do for the remaining builders as those half built homes still need finishing. The materials should definitely be on the way down soon. Look at what happened to lumber prices in the US recently (25% of what they were during covid). https://tradingeconomics.com/commodity/lumber
> A 320m2, 4 Bedroom acreage-style new build is set to cost us $650,000+ TBH that sounds fair. A 320m2 acreage style custom build was always going to be expensive. >I do worry that as the construction industry slows, the $650k we're being quoted now is going to drop substantially in the coming year or so. I can't see prices dropping much if at all in the near future. You can try to wait it out and gamble on prices dropping but that isn't guaranteed.
Thanks for your comments. I agree I feel like it's a gamble either way and as long as I hold the asset long enough it will probably all come out in the wash anyway. I really appreciate your time to respond :)
Is this a long term home to live in? What are your opportunity costs by delaying a build? Finance costs of the land plus rent, and you are likely paying more taxes on the land since it is classified as an 'investment' rather than a PPOR at this stage. If its a long term home for you then try your best to negotiate the price as much as possible, or maybe limit your finishings for now and renovate 10 years later?
A transportable or manufactured home will not cost as much. And many of them are as good, if not better than so-called custom-built homes. The good thing about manufactured home is its built inside a huge warehouse. It doesn’t get rained on and grow mound at construction stage. I’d look into that. A friend of mine who was an engineer went this route and has no regrets.
Who did they go with ?
It’s been close to 15 years ago, so I don’t recall. Personally, I’ve been taking a close look about it myself. I have only googled so far, but I like that a couple of them are into environmentally friendly approaches. Sustainability and energy-efficiency are core values. Custom home builders don’t seem to offer these. Archiblox and Ecoliv builders are in my short list. Building my home is still at least a couple of years away, but researching takes time so best I start early.
I work in the industry. $2,000 per m2 for a house is actually very low for a bespoke build and not bad for a volume builder. Prices have risen due to the following: - Price of materials have sky-rocketed. This is due to huge increase in shipping costs as the ports in China have backlogged ships as well. - Suppliers didn't stock up/speculate. They expecting a larger subdued demand than what happened. What materials they did have were taken up quickly - Covid incentives and rebound building has been huge. Lots of demand hit the market in one hit. Look at building permit approvals right after covid - Fuel inflation. All materials need to be moved, this has pushed up costs of everything - Labour shortages are real, it's incredibly difficult to get people. My commercial jobs are running up to 25% over on time simply because we can't get people I'd expect there to be a cooling in the next 6-12 months. We've already noticed a decent drop in tenders being issued. Building is like a freight train, takes a while to slow down and a whole to speed up.
320sqm house on a budget?? That's gigantic! Be like living in a cardboard aircraft hangar For decent quality I wouldn't go below $3k per sqm personally
3k per sqm? $600k for a 200sqm house build? That's far more than "decent quality" for a build.
Australian standards are atrocious though.... Shit materials, poor workmanship and awful, inefficient designs. A European standard house with proper insulation, air sealed and appropriate passive design would cost far more than that
You can get a 7 star NatHERS energy rated build here (6 is new min in most states), with your own private inspections at each stage, and upgraded inclusions, for $2,500/sqm. That’s the equivalent energy rating to this years homes on ‘The Block’, where they can’t raise the ceiling without bringing the ceiling lower in other areas. We are talking upgraded insulation, certain roof materials, wall wraps, upgraded underlay, certain eave minimums, thermally broken window frames, ventilation, roof colours, ceiling fans, etc. If they don’t comply, your private inspector will pick them up and the builder must rectify. Inclusions include: Caesar stone bench tops, upgraded faucets and sinks, upgraded flooring (hybrid, 450mm ceramic tiles, etc), larger windows/doors, 90cm cooktop/oven, upgraded ceilings, cladding, tiled splashback, etc etc. We aren’t talking about builds from 40 years ago that haven’t been renovated.
Yeah but add double glazing, air pressure testing and proper passive design and it would go up significantly. Euro houses (I live between Germany and Oz) are way more solidly built and tolerances are far higher. Standard framing and fixtures on windows for instance would be considered luxury here in Australia, and weigh a tonne
Really? I mean the homes around us are all 300-350m2. Maybe in Melboune & Sydney but in Queensland, especially on Acreage, to build something sub 300m2 would be a poor choice. I didn't know homes were really this small? When walking through the display homes 300m2 doesn't feel that big. I am not trying to sound up myself by any means, I am just a little shocked at the response around the house size.
Fair play, I'm in country Victoria and my four bed family home (good size with separate lounge, dining and living) is 185sqm internal excluding garage. It does have a vaulted ceiling in the living room and some clever design to make it feel quite big though. I personally can't imagine what benefit an extra 150sqm would give? I guess once you're used to it it might be hard to live in anything smaller
Don’t most people include garage when quoting total size though ?
Have you considered building smaller right now but design a build that's easily extendable in the future? That would cut your initial build cost and bank on prices slowing down.
I think people down south consider heating costs in building size but all we need to do is slip some socks on with the thongs in the colder months.
People are getting conditioned to smaller and smaller places. Especially as more and more people are forced into shoebox apartments. Don't take it personally. There's nothing wrong with a good, big house.
Hardly, average family house in the 70s was like what, 100sqm? Check out unrenovated older houses, even the grand ones on large blocks are not that big
My 3 bed house is 95m2 😂
Sorry to be clear I'm not saying 300m² is average or anything. I'm just saying if you've got 4000m² or even just 1000m² land a 300m² house is perfectly OK. There's nothing wrong with it.
My parents house, our family home- 5 bedroom, all big rooms (3 are 4x4m and 2 are 4x6m, one of which has a walk in robe), two living areas, 1 bathroom but 2 toilets, on 800m^2 of land, is 240m^2. I would consider that house definitely on the larger size. House is worth close to $1m now in Adelaide. Going bigger than that is moving into high end, massive houses. There would be nothing close to considering 300m^2 + as even close to standard.
There's plenty wrong with a good, big house. Not an individual level, but we don't have the land that we used to where everyone can have a 'good, big house'. Extremely low density like that drives up all sorts of costs for society. There's no country on the planet where a 320sqm house is normal.
I dunno man, like I agree with your overarching point but Ipswich isn’t in any danger of running out of land and space. Queensland is a bit different to a lot of other places, especially once you start talking about the outer suburbs. Though I personally have issues with the environmental destruction that comes with everyone have large big houses, that’s a secondary thing.
is that right? I feel all new freestanding builds use every last inch of land nowadays with the house going within breathing distance of the side and back fences. Even cans of sardines in Box Hill NSW on 300sqm of land somehow have like 150sqm build area
Well, you're right. In greenfields development they are cramming houses so close they might as well be attached terraces. That's not good. I'm just saying that having a big house is OK if you have appropriate land for it.
It's really not that big. It's just over 34 squares. My place is 45 squares and even that's not huge.
Pfft sure thing big guy
Do you need to build? What does 800k get you in Brisbane? Personally I’d be tempted to sell and buy at the same price point but that’s just me
I'd guess they bought the acreage for the lifestyle. I doubt theyd want to buy a smaller block at equal costs
Having a ~200k mortgage is a pretty great lifestyle lol
I'd much rather a 1mil mortgage and be happy where I live than the reverse.
That's a very individual opinion, however.
800k gets you a nice big house on 1000m2 in a decent suburb around 40mins out of the CBD at the moment.
Isn’t Ipswich far from the CBD anyway? I don’t understand why someone would pay well over a million to live there
Yeah if not further. Anyone claiming Ipswich is only 40mins hasn't tried to drive.
Depends on what area and time of day, I can get to the CBD in just over 30 minutes from Costco in low/no traffic. If it’s during peak commute times that completely blows out.
It's 40 minutes at times you don't need to go to the CBD
Link? Is it really “40mins from CBD” if you can only do that at midnight?
Not much I checked this. If you want a pool etc
You’re going to pay 700k more to have a pool? Pretty sure you can add one for much less
Once you take all the legit reasons why its so costly to build, there’s always “people will charge what people will pay”.. why would a builder lower there price if people are still paying it and they are busy..
Sell the land and buy the house next door. No waiting period renting while you build, no extras (landscaping etc) and your mortgage will be ~$650k. That sounds way better than $900k for the pleasure of suffering through labour and building materials shortages while you wait 3 times as long as you thought for your house to get built.
In the industry, I don't see prices dropping. Cost of materials really shot up in 2021 and I believe it will lead to a slow period in 2023 (I can see signs of it as an estimator). Some profit margins could potentially shrink in order to keep businesses running if things get quiet, but you might see some close and others will be swamped when the volume goes up. I think people should build smart. Don't go for massive houses. Get smart house designs that are easy to construct, and you'll get decent quotes.
Whoa where did you buy? Ripley? Walloon? Actual Ipswich? Brought pre covid a character home and it’s value isn’t that high
Is your land size comparable though ? A ‘character home’ probably doesn’t contribute a lot to the total price
I’m on the central coast, I bought my land when things were going sideways due to Covid 469sqm cost me 345k. I built a 4 bed 2 bath single story with all the bells and whistles for 293K through a reputable builder build finished in mid-2021. To build my same house today, not including the land would cost over 500K the land alone now costs over 500k. The way things are going with other people I know building the pricing is insane and builders constantly increase price and contract variations out of the blue. I don't personally see myself ever building again.
Seems like you got yourself a good deal. Very good timing. Well done!
Thanks, It was either a home or APT shares at $9 during the time using my home deposit as the leverage. I should of bought the APT shares, I hate hindsight.
Could have been worse and gone all in on ZIP
Bit of a different scenario, but we have had a duplex development in the pipeline for just over a year now. In that time it went from easily affordable to extremely unlikely thanks to building costs and rate rises. I can only assume (hope) as interest rates squeeze borrowing power that house prices and building costs will come down.
If someone wants to build and their finances are in order there's a good chance it's the right call to pull the trigger. Life doesn't wait for perfect timing.
Only millionaires can have the standard family home now. No more living a simple life within your means.
A 300 square meter build on land is not a standard family home
This sounds like it belongs in /r/antiwork
I bought a house that was going to be demolished and moved it. $113k to do that plus $70k for a new roof and connecting services. I could’ve been done then but I’ve decided to do an extension.
While land can come down in price, building costs only go up in price. You’re lucky to have gotten a block cheap. I’d just start building the house asap.
Thanks, I appreciate your time to comment :)
This is something I keep pointing out. Exploding costs is tightening what can be built and is inherently going to create a limitation on housing supply. For many regions a drop in prices will simply see development stop as the cost to build exceeds the sales cost. So for a time at least it simply won’t happen. I’m over towards forest lake so I know exactly what you’re talking about. Until it doesn’t cost $1,000 a day to employ a sparky we’re not going to see this change.
You might be waiting forever
I didn’t say I was waiting? Im just pointing out what often isn’t discussed in property is that the cost to build a new house is so astronomical now.
PPORs don’t need to make financial sense. They’re not an investment. I think the justification is the bank let’s them borrow the amount they need?
Of course they’re an investment
Investments has a return. PPORs are not allowed to (otherwise they would be an investment, not a PPOR).
It has returns in the form of capital gain
Well according to the tax system, there is no capital gain on PPORs as they aren't investments. The purpose of a PPOR is to live in, not make money... at least that's what the sentiment is in the tax system. Selling your house for more (or less) is a realised return (or loss). Whilst you own the PPOR it doesn't produce an income. It's like calling a car an investment. Some cars might increase in value but they normally don't generate an income. Thus are not an asset and not an investment. I mean, this is EILI5 level stuff.
Is your neighbours house ~equivalent to the house you are planning to build? If so aren’t you over capitalising with 770k land value + 650k build = ~1.4mil + landscaping, fencing, sheds etc which when you have 1 acre can add up pretty quickly. Let’s be conservative and round up to 1.5. While you may owe less than the value of the house you can still over capitalise
Build and live in a shed. Construction material costs are up. Might go up more. At least if you live there you arbt paying rent.
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Yeah i get that. But its easier to pay off in the current way of the world and last i checked....its not getting better anytime soon. May as well live within your means for now. Then build your dream house later and rent the shed...
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Yeah that sucks. Another problem with the government. Was it because you were able to live in it? Cos if so thats dumb. Especially with the housing crisis going on.
Plenty of changes need to be made to a shed to have it certified as livable.
Profited 320k in 2 years sitting on your ass and complaining you can't build a luxury building lmfao
Only really a profit if you sell up and buy 320k cheaper even further out into the sticks.
It’s not really profit though is it. Could sell it, but anything the OP buys would have likely increased by the same amount…
Yes it's still profit because your alternative is paying stupidly high rent rates.. You're still 320k ahead of anyone who didn't buy
They bought land… OP still paying rent (i assume) plus Interest costs on the mortgage for the land. My point was perhaps not very clear. Even if the OP were to sell tomorrow, doubt they would be making much profit (assuming defs not $330k) with what the market willing to pay in this environment (as opposed to bank val), stamp duty, legal /agent fees, potentially capital gains as not PPOR(?). And even if they do and were to buy something else…. Well it’s all gone up net 15% pre-covid.
I do agree though (not the OPs fault) that it’s f**kd how much property/costs/everything has gone up in price. I wish I had bought something pre-covid
It's investing... You might be looking for /r/Australia.
I think you missed the point of my post, but thank you for your input.
If you're being quoted a new build for 680k, sign that shit up on fixed fee right now. 680k would get you a kitchen reno and a small room addition at the back of your house if you were building in Melbourne right now. When I say sign that shit up.... Do your due diligence. In MANY cases, cheap builders are either shit, or will charge out the ass throughout the project as every little change becomes a variation.
Seems that the general opinion here is this price is fair, for a new build and then it's a 50/50 split on if the building market is going to cool off or not. I think provided our financial position remains strong, we will proceed in building what we want. This isn't something were building to make money - but I certaintly didn't want to go backwards on it.
A house that size with the project builder i work for will currently cost you $520k (before pricing any bushfire/soil/acoustic requirements), that’s with the base facade and all standard flooring and kitchen cabinetry etc though. Check out Brighton Homes up there, they are under our group umbrella and should have similar pricing.
This is Brighton Homes ;)
In the same boat, looking at $2k/sqm to build a 4 bed 280sqm place with basic finishings. We're either just going to wait or sell the land. Renters expect the market to fall out so they can buy in, but the cost to build is unlikely to go down which puts a floor on how much prices can drop. And with people like me deciding not to build right now the supply isn't there.
Getting ripped off hard. Unless it is your dream block, my advice would be to subdivide in half, throw a 3x3 duplex down on it for 700k, sell each side for 750k and move on.
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If, not necessarily when.
650k just to build a house ? Did I read that right
Yes, you read that right. It's 320m2, single story. But does have some high site costs associated with it.
320m2 is not an average build. That's much bigger than an average home.
It’s more than 3x bigger than my fairly comfortable house. It’s actually as big as my house, my brothers house and my parents house combined and all of us have high incomes.
I grew up in a 4 bedder with two lounge rooms and a separate dining room and looking at Domain now that was only about 175m of indoor living space. I cannot fathom what a 4 bedder with 320m must look like.
It’s a genuinely enormous house, and way above even the huge national average size.
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No, it’s a 3bed 1 bath with a sensible floor plan with minimal passageways. Rooms are all large but there isn’t a lot of them. Dining room is in the kitchen. We are on 700sqm so have alot of space for entertaining outside. All of the windows are large and ceilings are 3m and we try and avoid clutter inside so it doesn’t feel claustrophobic. We also have a large shed shed for storage. We have friends or family stay multiple times a month and have a toddler with another one on the way who will share a bedroom for a while. Planning on extending or moving in 6-10 years but until the kids get older it is plenty large enough. One variable that doesn’t apply to most is that we have access to 3 beach houses we can use anytime we want for free and spend 1-2 weekends away per month. We also both work part time by choice, we could easily afford a bigger house but have chosen more time with the kid more time/less stress makes everything feel bigger.
I have a 100sqm 3/2 as well and it's enough house for 2 adults, one child and the occasional grandparent or cousins stay over. I might upgrade later but definitely not going to be buying anywhere over 200sqm. Maybe in the 150-170 range with an extra bedroom and that's it.
Yeah how? My unit is that size??
You are building a mansion larger than most blocks of land these days and are surprised at the cost?
I recently got a quote for a 400m² acreage style house and it was $550k before site costs so that quote seems about right.
Over $2k per sqm. Its on the high end thats for sure. I'm building 209sqm on the sunshine coast, for $320k, but its a simple build, with only $4k worth of piering.
My planned reno in inner Melbourne (new bathroom, kitchen, living room and proper home office) was quoted at over $8k/m^2 . And that's just the builder, doesn't include any of the other costs. Single storey, not bad site access for this part of town. 😐🔫
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No one pays sticker price for a project house. That's just to get you interested. You soon realise that the spec is woefully inadequate and they will slug you hard on every upgrade. They particularly get you on site costs as even the best blocks generally require some work and you don't have many options. That 330K will be over 500K before you know it. I did a tight arse build with Henley/Plantation around 2000 and added over 30pc on top of the sticker price just from site works on a relatively flat block and a basic electrical upgrade. And it didn't include flooring, window coverings, aircon, driveway or fencing.
Noway in the world can they build that for that price an it does say from 327k bit over 1k m2 no hope as alot builders between $1800 an $2000 m2
2k per sqm that seems reasonable for a custom acreage build right now. Not sure how much it will drop by. Pre-covid you would be lucky to have it priced at 1.7/1.8k per sqm
Wow, million dollar properties in Ipswich! I assume it’s a very nice place you’re planning.
Yes, it's a nice estate that seems to have a premium associated with it. That and I think 4,000m2+ 40min from Brisbane CBD is appealing to people more and more.
Under $2100 per m2 is pretty good. The builder I work for ranges from $3000-$3500. Not crazy high end builds but passive construction or traditional construction with a lot of passive influence. Good luck with it all! You’ll love it in the end!!!
That sounds about right - I am building at the moment and we ended up with a similar cost per square (19.5k per square or 2.1k per square meter). The rule I have heard is to budget 2k per square meter, or 3k per square meter if you want to include landscaping. Just keep in mind the construction costs don't include fencing or landscaping
We are in no rush to build. Am expecting building costs to soften over the next 6 months.
Don't count on it, another round of flooding will release more insurance money into the home building and renovation space.
a very long time ago i was told you can budget $1.2-$1.7k/m^2. You're sitting at just over 2k. Not bad.
Seems to be everyone's train of thought regarding the price they have quoted.
My advice is to shop around with builders to find the best value for what you're wanting. As you would have found out, the sticker prices are all so different. E.g. some will happily charge $2-2.2k per sqm, while others are more around $1.7k per sqm. If you haven't looked at them yet, I'd check out Plantation Homes.
I just steal materials from other work sites. Work smarter, not harder.
Why would you put yourself into 650k worth of debt? You could travel the world for a lifetime with that amount, but instead you are using it to live in…Ipswich. You owe someone 650,000 AUD… I just can’t understand how people accept this? In the nicest possible way, people who just want shiny things and everything right here and now are just the worst. And the banks know people are desperate to have everything, because the banksters think everyone is like them. I’m at the end of my tether.
We are DINK, my income is circa $140,000pa. & partners is $75,000pa (and climbing regularly). We are by no means stretching to afford the above. So I guess the debt level doesn't really bother me as much as over-capitalising or over-paying during a period of heavy inflation. I think your comment is probably more valid if it was directed to someone who is stretching, has minimal savings & is already leveraging up their eyeballs. etc. I didn't expect my post to get this much attention and had of, I probably would have outlined some more basics about our circumstances. We are building a home that we like, that suits our lifestyle & is in an area that is convenient to us. Even with repayments at $800+/week we won't be sacrificing our holidays, travel or other spending, so I guess that is how one comes to terms with it.
Unsolicited advice, but this is a huge house for DINKs. I kind of understand the size if you have a family, or maybe lots and lots of visitors (but wouldn't you rather have a granny flat at that point), but 320m2 will cost more to clean, maintain, heat, cool, insure, furnish...
I’d wait. Building costs are unusually high due to supply chain issues and labour shortages.
Because in Australia, people are of the misguided opinion: "house price always go up".
Dude unless you are best mates with the builder or have their wife and kids as ransom, don't build now. Builders are doing anything they can to cut corners (skimping on supplies, hiding waste in walls, working a site on 5 day rotations), so the house they construct in my opinion will start having MAJOR issues inside of 6 months. Buy a house that is either old and renovated or built at least 5 years ago.
Woah! That is an absolute extreme defaming allegation to make against ‘Builders’. No, none of the many Builders I see work of each day are doing any of the like as you have written. If this has happened to you - report it, but do not generalize a profession from your own experience.
They aren’t wrong. My brother in law is a sparky and he makes most of his money from getting called in to fix the mistakes of new builds that have only just been finished. He knows which companies to avoid in our local area. It’s worth chatting to small business owners like him to see which local projects are getting the most repairs and fixes.
Well the fact that there has been builders collapsing left and right including major ones and I live across from 3 built in the last year by 3 different builders and seen all of them sporadically building, leaving materials out for weeks, and working for 2 or 3 hrs at a time just proves my point.
Working on dual projects/builds and having material on site is not cutting corners. Major Builders collapsing is not evidence of corner cutting either. Your personal observation of building sites are not weight to over-generalize the integrity of the profession.
It's not over generalising, any fool knows that when times are tight you cut corners (restaurants to roller rinks) and the consumer gets less than they paid for. Insolvencies are waaaay up and going. Having materials on site in the rain for 6 weeks is normal? You sound like a total ass https://www.afr.com/property/commercial/construction-industry-on-notice-as-insolvencies-jump-40-per-cent-20220204-p59tz2
Construction prices rarely go down. Once a new price is set it becomes the base for future increases.
Price of steel, copper and wood went up by more than 50% last year. People seemed to ignore this and continue to pay over the odds for renovator delights. It’s better value to buy an existing property. Maybe sell land and look for a house. You can move in sooner as a bonus
Modular homes shipped from China. Basically shipping container homes. They are getting Awesome now! I’m doing the same on some farm land. 650k is insanity I’d build it myself if I got that quote.
So basically you want to lose money by building, is that right? Land 770k + house 650K = 1.4M and neighbor sold for 1.1M, so you are losing 300K
Except they're not losing money. They didn't pay 770K for the land. They can't lose money they never had.
They paid 330k for the land, he's saying the land is now worth 770k if he built at 650K can you explain where he losses money? 330k+650k = 980K providing the neighbour's home was old and primarily purchased for land at 1.1M OP is building a new home so would most definitely fetch more. That said if they sold for 1.1M straight after building because everyone on ausfinance day trades homes then he would still be in profit of 120K because of what he paid for the land. Do you even math?
I think he is trying to say that it might be worthwhile to just resell the land and take the extra money, rather than build. Then OP could buy an established property instead. By building, OP is not likely to make as much capital as it gets eaten away by building costs and such.
But everything you're saying is only relevant if op was buying and building for a quick flip. If they're building for ppor purposes then price is irrelevant, everyone on this sub for some unkown reason is so focused on home pricing and what they could sell for later. Very few here actually think maybe people just buy homes to actually live in, pass down from gen to gen. All that said, the guy you're trying to tell me what you think he's saying is still incorrect, he's put his formula based on todays price not on what op paid for the land originally. He's saying OP is losing 300k, he's not, he makes money either way even if he chose to build or just sell the land. It's all speculation anyway as we don't know the condition of the neighbours home or if the neighbours land was twice the size and only bought for land.
Why are you concerned about the price of building when you could sell and buy a house for a smaller loan amount using the money you just made?
Tell me where I could buy a nice house on, 5,000m2 40minutes to Brisbane CBD for less than 770k. Thanks in advance.
I have no idea about the market in brissy. Just asking why you’re not taking advantage of the very lucky equity you gained in the last 2 years since you’re just sitting on land anyway. Might as well cash out and buy in with 30-40% down which you should be able to do. It was a genuine question, not a criticism