Just Like Property Market, Building Costs Are Rising

As per the recent data released in the latest Domain House Price Report, Sydney house prices have increased. It has risen to an average of more than $100,000 in the initial three months of 2022. These figures show the fastest quarterly growth since the records were set in 1993.  

But it is not just the house prices across the country that are rising at an unprecedented rate but the home building costs are also soaring. 

Driven by the Government’s Home Builder Grant, the demand for labor and construction materials has also at present outweighed the supply.  

The grants in combination with the record low interest rates and a shortage of both tradespeople and building materials have created a perfect storm for increasing the cost of buildings.  

If you are someone who is looking forward to renovating or building in the next twelve or twenty-four months then you must consider the market conditions.  

In line with the conditions of the $25,000.00 grant, home owners have six months from the point of being approved on the grant to sign a contract with a licensed builder. If they cannot meet this deadline, the only option left is to forfeit the grant given.  

A looming deadline for thousands of homeowners ready to begin construction has just resulted in builders struggling to find subcontractors and materials while local governments are covered under the development applications. 

Housing Industry Australia 

As per the Housing Industry Australia (HIA), new house approvals are rising at the strongest rate in next twenty years of record.  

Builders across the country are unsurprisingly the busiest they have been – some have even been booked up for the next two years. 

With not enough materials or trade to keep up with the demand, many who are hoping to renovate or even build will have to not just be patient but pay a premium.  

As with the marketplace, when demand outweighs supply – prices rise subsequently. 

Builders also had to absorb the increased costs of materials and labour and also need to pass these to the homeowners. It is also expected that the inventory of construction materials will gradually begin to improve as the imports rise but for now, blown out timeframes and inflated costs are the reality. 

This increase in demand to build supplies has not been felt in our shoes but has also been felt globally as people across the world have decided that the backdrop of a pandemic was the perfect time to build, invest and renovate.  

If you are looking forward to buying or selling land in Victoria, contact our experts at Raine and Horne Land Victoria.