In 2001 it was around $125,000,a decade ago $270,000,and as the pandemic began in WA it was around $312,000. Cost increases had been relatively flat since around 2007,but the pandemic rise has been the sharpest in a two-year-period since the turn of the century.
In October 2021 the average cost of building a new house was $300,031. Now it is $383,528,a rise of more than $1500 a week.Bloomberg
Housing Industry Association deputy executive director Phil Vaughan said while elevated prices were expected to continue in 2023,it wasn’t expected they would rise exponentially.
“The change in construction pricing has been driven by both increases in material and labour costs,” he said.
“Material costs have largely stabilised and while we may still see some increases,we do not expect the level experienced in 2021/22.”
Vaughan said as materials became more available it was anticipated completion periods for new homes would return to normal durations.
Lengthy delays to build a new home prompted hundreds of disgruntled clients to which has a 16 per cent share of the residential construction market.
Around 70 per cent of new dwellings approved in WA between June 2020 and December 2021 are yet to be completed,according to a survey of Perth’s largest local governments conducted by the Department of Mines,Industry Regulation and Safety.
Vaughan said labour issues remain the largest constraint with more workers required to increase production and work through the enormous pipeline of projects.
“WA continues to have a housing supply problem rather than a housing demand issue and an increased labour force is required to continue the building of housing stock and facilitate growth in WA,” he said.
Building approvals in WA have plummeted in WA and are the worst in the nation,dropping by nearly 30 per cent compared to the same time last year on the back of negative sentiment surrounding rate hikes,lengthy construction delays and high-profile company collapses.
Total building approvals by state were mostly down in the three months to November compared to the same quarter in 2021,with the declines led by Western Australia (-27.4 per cent),followed by Queensland (-16.8 per cent),New South Wales (-12.0 per cent),and Victoria (-6.6 per cent).
South Australia was the only state to record an increase (+6.2 per cent).
The number of homes under construction rose quickly in October 2020 spurred by generous state and federal government grants.
In November 2022 there were 1127 dwellings approved for construction in WA,down from a peak of 2681 in March 2021.
The drop-off in new builds has prompted the peak body for home building in Australia to issue a stern warning for the Reserve Bank to put the brakes on any further rate rises.
“We are adamant that the RBA should not hike any further and may have even gone too far,” said economist Tom Devitt.
“The RBA has already undertaken the steepest hiking cycle in a generation and it needs to hold fire on further hikes to give their actions to date time to play out.”
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