How much does it cost per square metre to build a house in Australia?

To quote an overused phrase, you might well ask how long is a piece of string.

The short answer is, it depends.

What kind of house do you want to build? A sprawling family home or a compact single person dwelling?

Top of the range custom made fittings, or will budget finishes suffice?

There are many factors to take into account and the reality is it’s a bit of moving target at the moment. Costs are changing daily and there are some well documented pressures on the building industry from a number of different sources.

We’ll try to break it down a bit.

What impacts the home construction cost per square metre?

It depends on a number of factors:

  • the type of construction – is it a simple weatherboard home or an architecturally designed full brick home? Or something in between?

 

  • the size of the dwelling – a modest two bedder or a five bedroom family home with multiple bathrooms? Is it one level or two (or three)?

 

  • the complexity of the build – is it a level block that’s ready to go or is it mountainside with a need for excavation to prepare the site? Is the site easily accessible?

 

  • the quality of finishes – budget materials or marble imported from Italy?

 

  • location – with costs of petrol at record highs, the further your materials need to be transported, the higher your budget is likely to be.

 

Depending on who you talk to, prices can start at around $1200 per square metre and increase from there depending on all of the factors listed above. As a guide, costs typically consist of 50% for materials, 30-40% for labour (including consultants) and 10-20% for councils and permits. These costs are fluctuating greatly at present though with both materials and labour costs under significant pressure.

It’s a good idea to include a contingency amount to the total for unforeseen costs. Rule of thumb is to add an additional 10% to the total cost at a minimum, however if this is your first build, it would be prudent to add 20% to make sure you are well and truly covered.

 

Why look at the cost per square metre?

Calculating a home construction cost per square metre is a handy metric for comparison, especially if you’re deciding between two builders and need a like for like breakdown. It can also be a useful way to decide on your budget.

A per square metre (m2) figure is a great baseline and builders often use it for pricing jobs at a high level. This method for calculating construction costs simply multiplies the total floor area, in square metres, by the square metre amount.

To work out the square metreage, measure the length of an area (say the lounge room) followed by the width, then multiply the two measurements to give a square metre total.

Say for example your lounge room is 3.60 metres long and it’s 2.25 metres wide, multiplying them you get a total area of 8.1 square metres. It starts getting trickier when you have odd shaped rooms, but essentially once you work out the square metreage of each room, you add them all together and get the total area for the project.

If you have house plans produced they will tell you the areas, but it’s always good to have an understanding of how it all comes together.

So say you have a total area of 200m2 (which is around the average for houses in Australia, depending on which source you read), and you’ve been quoted a home construction cost per square metre of $1500, you will have a total build price of $300,000.

 

You need to check the quote carefully for what’s included and excluded – does it include landscaping? Driveways? Appliances?

 

There’s much to be mindful of.

 

Construction Cost Index

It’s hard to ignore the impact of rising prices on housing affordability.

There’s no doubt that costs have risen significantly in the past twelve months.

We’ve discussed in previous articles the reasons for these increases and they have been widely reported on. They include the impact of COVID, the war in the Ukraine, sanctions on Russian exports, increasing interest rates and surging petrol prices, just to name a few.

There have been multiple construction companies succumbing tp the current pressures on the industry.

Builders and developers should always keep a close eye on the construction cost index to inform their budgeting and planning decisions, but even more so in the current climate.

So what is a construction cost index?

In the same way that the Consumer Price Index (CPI) compares prices in each quarter or year to the same period in the prior quarter or year and gives a percentage change (generally an increase but not always), a Construction Cost Index does the same for construction costs.

There are multiple sources of data and it’s important to understand what the inputs to the model are in interpreting the metrics produced by the index.

The Australian Bureau of Statistics publishes a price index specific to the construction industry each quarter. This forms a great base for more in-depth analysis.

How can MCG help?

We at MCG Quantity Surveyors can help with all of these steps, from working out the square metreage of your project to determining a baseline home construction cost per square metre.

We’ll also help you keep a close eye on costs with reference to our Construction Cost Index.

MCG Quantity Surveyors are acutely aware of the current challenges faced by our clients when it comes to planning and assessing their property projects. We make it our priority to ensure our reports take into account all possible cost implications.

We may not be able to control rising prices or materials shortages, but we can definitely help you calculate your home construction cost.

We think that’s a pretty important step.

Contact us now for an obligation free quote on 1300 795 170 or go to our website mcgqs.com.au for more information.

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