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Increasing Construction Costs: When Will Australians Find Some Relief?

Increasing Construction Costs: When Will Australians Find Some Relief?

house cost estimator

Construction costs in Australia have risen over the past few years. In 2022 alone, the cost of many building materials has spiked up to forty percent, adding pressure to the already stressed construction industry.

It’s been predicted that the industry will experience some respite in 2023. But prices have remained stubbornly high, and increasing construction costs is still something prospective property owners and builders can expect in the near future.

How Much Does it Cost to Build a Property in 2023?

cost to build a house

Residential Project Cost Per Major City

Sydney has always been at the top of the list of the most expensive cities to build a house in. Property owners and builders can expect to spend upwards of $1,300 per square metre for residential projects.

You can also expect increasing construction costs in major cities such as Adelaide, Perth, and Melbourne. On the other hand, builders in Brisbane, Gold Coast, and Sunshine Coast can breathe a sigh of relief as the overall cost of building a dwelling in these areas is lower compared to other major Australian cities.

Keep in mind that these figures are for single homes only. Building costs go up significantly for high-rise apartments and townhouses.

Office Building Project Costs

As expected, Sydney still tops the list when it comes to the cost of constructing an office building. The cost of building a 20-storey structure per square metre here starts at more than $4,000.

This is followed by the city of Melbourne and then by South East Queensland. Office buildings per square metre start at nearly $4,000 in Perth. It is followed by Adelaide at a little more than $3,000 per square metre.

Hotel Building Project Cost

Building and fitting out a five-star hotel is a different beast altogether when it comes to costs. This type of construction is the most expensive in South East Queensland and Sydney.

Good news for builders in Adelaide, Melbourne, and Perth as prices are significantly lower compared to the first two areas.

Industrial Building Project Cost

Increasing construction costs is not the only thing hounding builders specialising in industrial projects. Land values have also skyrocketed in the past few years, and finding available and suitable sites for this type of project has become increasingly harder.

Melbourne and Adelaide take the cake regarding the lowest construction cost for building an industrial property. Perth sits right in the middle, followed by cities in South East Queensland. Unsurprisingly, Sydney still takes the top spot when it comes to high building costs for industrial properties.

Retail Construction Cost

Adelaide and Melbourne are considered bright spots when it comes to low construction costs for retail properties. Perth comes in third, while South East Queensland is the second most expensive place to build a retail store in the country. Sydney is still the frontrunner when it comes to high prices in retail construction.

While we’ve left supply chain woes caused by the pandemic far behind, the Australian construction market is still plagued by high fuel and material prices, as well as ongoing labour shortages. These, in turn, have led to soaring prices for new construction. As a result, many developers have held off on many projects, including residential ones.

house construction cost estimate

Estimate the cost of a construction?

Estimate the cost of a construction?

house construction cost estimate

Estimating the cost of a construction project involves a detailed analysis of various factors and components. While it requires experience and expertise, here are some general steps to help you get started with estimating the cost of a construction project:

1. Scope Definition: Clearly define the project scope and objectives, including the type of construction, size, complexity, and desired quality standards.

2. Takeoff and Quantification: Perform a takeoff, which involves reviewing project drawings, specifications, and other relevant documents to determine the quantities of materials, labor, and equipment required. This step involves measuring and quantifying items such as concrete, steel, roofing, electrical components, etc.

3. Material and Equipment Pricing: Research and obtain up-to-date pricing information for construction materials, such as lumber, cement, pipes, fixtures, etc. Contact suppliers, review catalogs, or use online databases to gather accurate pricing data. Similarly, consider the costs associated with renting or purchasing required construction equipment.

4. Labor Costs: Estimate the labor requirements based on the project’s scope and complexity. Consider the various trades involved, such as carpenters, electricians, plumbers, masons, and their corresponding wage rates. Also, consider the duration of the project and the number of labor hours required for each task.

5. Subcontractor Bids: If the project involves subcontracting certain tasks, obtain bids from subcontractors for their respective scopes of work. Review and compare the bids to ensure they align with the project requirements and specifications.

6. Overhead and Indirect Costs: Account for indirect costs associated with the project, such as project management, insurance, permits, utilities, site office expenses, temporary facilities, and any other miscellaneous costs.

7. Contingency: Add a contingency amount to the estimate to account for unforeseen circumstances, such as design changes, weather delays, or unforeseen site conditions. The contingency is typically a percentage of the total estimated cost, and the percentage may vary based on the project’s risk level.

8. Markup and Profit: Include a markup or profit margin to cover the overhead costs, administrative expenses, and to generate a reasonable profit for the contractor. The markup percentage can vary based on the contractor’s business strategy, market conditions, and project-specific considerations.

9. Cost Calculation and Documentation: Sum up all the estimated costs, including materials, labor, subcontractor bids, indirect costs, contingency, and profit. Present the estimate in a clear and organized manner, specifying the individual cost components and providing a breakdown for each major construction phase if necessary.

It’s important to note that construction cost estimation is a complex process that requires experience, knowledge of local market conditions, and familiarity with construction practices. It’s recommended you consult with industry professionals, such as What’s It Cost estimators, who have expertise in construction cost estimation to ensure accuracy and reliability.

construction costs

What influences construction costs?

What influences construction costs?

construction costs

There are several market conditions that can influence construction costs in Australia, including:

1. Labor costs: The availability of skilled labor and the cost of wages and benefits can have a significant impact on construction costs. In a tight labor market, where demand for workers is high and the supply is limited, wages and benefits may increase, driving up construction costs.

2. Material costs: The cost of building materials, such as steel, concrete, and timber, can also have a significant impact on construction costs. Material costs are subject to fluctuations in supply and demand, as well as changes in global commodity prices.

3. Interest rates: Changes in interest rates can affect the cost of borrowing money for construction projects, which can impact overall construction costs.

4. Government policies: Government policies, such as tax incentives and regulations, can impact the cost of construction. For example, changes to building codes or zoning regulations can require builders to use more expensive materials or construction methods, increasing costs.

5. Economic conditions: The overall state of the economy, including factors such as inflation and unemployment, can also influence construction costs. During periods of economic growth, demand for construction may increase, driving up costs.

6. Exchange rates: Exchange rate fluctuations can impact the cost of imported building materials and equipment, which can have an impact on construction costs.

It is important to note that these market conditions can be interrelated and can have complex interactions, making it difficult to predict the exact impact on construction costs. However, monitoring these factors and working with industry experts can help project managers make informed decisions about construction budgets and timelines.

calculating a property construction cost

Construction Costs in Australia

Construction Costs in Australia

calculating a property construction cost

It’s hard to not make mistakes when calculating a property’s construction cost. Make a simple mistake here or omit something there, and it’s going to cost you thousands of dollars – if not more. And do-overs and modifications not just cost you money but will also push the timeline of the project altogether.

That’s why it’s important to know the cost of the construction project before you break ground. So here are the different factors that can influence construction costs when you’re building a home in Australia.

1. The size of the property

Size is one of the primary factors that can affect the overall cost of the construction. A starter home for a small family will definitely cost less than a palatial abode in the city.

Larger homes naturally require more materials than smaller ones. These include

  • Cement
  • Aggregates
  • Reinforcing bars
  • Wood
  • Steel beams
  • Tiles
  • Paint
  • Plumbing
  • Glass, etc.

2. The quality and specifications of the materials

The quality and specifications of the materials

The amount of material used to construct the property is not the only consideration when calculating its construction cost. You also have to take into consideration the quality and finish of the materials, as well as their specifications.

For example, let’s say that you’re choosing a material for your kitchen countertop. Quartz, granite, and marble countertops will definitely cost more than laminate countertops as they are more durable. You should also factor in the size, thickness, and difficulty of installation when calculating the total cost.

3. The property’s location

Planning to build a house in a remote location? You might want to rethink that if you’re on a tight budget. A luxurious hideaway on top of a mountain or a remote beach might be your dream home, but think about how high the cost will get when transporting materials and shuttling labourers during construction. There’s also the matter of laying pipes for plumbing and installing electricity around a remote property.

Some terrains are more difficult to build properties on than others, and that extra level of difficulty can hike up the cost of the construction. Sloping and rocky terrains are notoriously hard to build houses on. That cliffside dream house might offer a nice view of the sunrise over the Pacific, but get ready to cut a large enough check to cover the construction cost.

The ground where you plan to build the property is also going to be tested by a geotechnical engineer to ensure that the house’s foundation will be stable.

Another important factor that can affect your property’s construction cost is its vulnerability to bushfires. Houses in bushfire-prone areas are typically more expensive thanks to the addition of non-combustible materials and the improvements built to ensure that they can handle fires in the future.

4. The complexity of the architectural design

The complexity of the architectural design

Last but not least is the complexity of the property’s design. A single-storey minimalist home, for example, is pretty straightforward to design and build. This is in contrast to, say, a luxurious villa or a multi-storey seaside getaway with glass walls.

You can also expect higher prices this year (and even beyond) thanks to different factors, such as price hikes for certain materials, supply chain woes, and labour shortage.

WhatsItCost is an online provider of accurate and affordable building estimates. Based in Brisbane and with over 25 years’ experience.

© 2023 WhatsItCost.com.au.

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