Building a New Home: Construction Cost Changes

Presents changes in the cost of construction of new dwellings between approval, commencement and completion.

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Released
14/10/2020
Source
Building Activity, Australia, June 2020

Introduction

When building a new home, the final cost of construction can differ from initial expectations at the building approval stage and the start of construction. There may be numerous reasons for cost variations prior to and during construction, that appear to be more common for some types of dwellings (i.e. apartments) than others (i.e. houses). Examples include costs and contracts being finalised after council approval is sought or unexpected delays and complications during construction.

This article investigates the changes in construction cost between the value of approval, the expected value at commencement and the final value at completion of construction for new houses, townhouses and apartments. These values exclude the value of land and landscaping but include site preparation costs associated with building activity.

These data for each financial year from 2009-10 to 2019-20 are available in the data downloads section. The data presented in this article are sourced from the Australian Bureau of Statistics' quarterly publication 'Building Activity, Australia'.  This article analyses data for the 2019-20 financial year, unless otherwise specified.

The Building Activity: Average cost changes data cube is released annually with the December quarter edition of Building Activity.

Refer to the data downloads section in the latest December quarter publication of Building Activity, Australia.

Key Statistics

  • Almost half of new residential dwellings (44.9% of dwellings) cost more to build than they were approved for, while 22.5% of dwellings cost less.
  • Overall, new residential dwellings cost 1.4% more to build than they were approved for, with an average increase of $3,941 per dwelling.
  • Apartments had the largest changes in the cost of construction, rising by 6.3% between approval and commencement and falling by 8.1% between commencement and completion.
  • Houses had the smallest cost changes, rising by 2.3% from approval to commencement and falling by 0.4% from commencement to completion.

Australia

Approval to Commencement

Commencement to Completion

States and Territories

Houses

Townhouses

Apartments

Method

The values presented in this article are defined as follows:

  • The value of approval is the estimated total cost of building work at the time of approval, as reported on building approval documents provided to local councils or other building approval authorities. 
  • The commencement value is the estimated total cost of building work at the commencement of construction, as reported by the builder (where the builder is known to the ABS at the time of commencement) or the owner/applicant of the building approval (where the builder is not known at the time of commencement).
  • The completion value is the final cost of building work at the completion of construction, as reported by the builder (where the builder is known at the time of completion) or the owner/applicant of the building approval (where the builder is not known at the time of completion).

Data are presented for the following types of dwellings:

  • 'Houses' - defined as detached buildings used for long term residential purposes, consisting of only one dwelling unit and are not a result of alterations or additions to a pre-existing building.
  • 'Townhouses' - defined as semi-detached row or terrace houses attached in some structural way to one or more dwellings, with their own private grounds and no separate dwelling above or below.
  • 'Flats, units or apartments' - defined as blocks of dwellings that don't have their own private grounds and usually share a common entrance, foyer or stairwell.

For further information refer to Functional Classification of Buildings, 1999 (Revision 2011). 

Dwellings with cost changes below the 1st percentile or above the 99th percentile have been excluded from the analysis.

Data refers to cost changes per dwelling (i.e. if a townhouse project with 10 dwellings increased by $100, this would contribute $10 for each dwelling to the average cost change).

Data downloads

Building Activity: Construction cost changes

Data files
Download xls [334 KB]