We’re well into 2021 and still grappling with the same uncertainty we faced last year. The whole world is dealing with Covid-19, with a stall in travel creating negative ripple effects for so many of us. As we were forced to ensconce ourselves into our homes, these living spaces became our offices, our restaurants, and our gyms. There was a need to build a home that was inspiring and adaptable to all our needs. And for us in Australia, the decrease in interest rates made the dream of owning a home more possible than ever. So what kind of costs are we looking at now?
How Covid-19 has Affected Construction
The Australian construction industry has taken a colossal hit from the pandemic. For one, from the rise in supply chains disruptions like building materials. Where Australia previously relied on cost-effective imports from China, their disruptions in supply forced companies to depend on on-shore stock. What this means simply is contractors are delayed by a lack of materials. Logistical constraints on imported goods have further resulted in increased delays and inflated prices. The cost to build a home now could be up to 40% more than previous years.
Another point of concern is the weakening of the Australian dollar, which has resulted in a 15-20% increase in imported materials and equipment prices.
Because of social distancing requirements, adjustments have been introduced to the way contractors operate. Split shifting divides the labourers into two different groups, where both the groups work on alternate weeks or day/night shifts to avoid crossing paths.
Because construction companies need to instill proper hygiene practices and spread out their work spaces, they too are facing increased expenses.
But fret not, you may be eligible for help from the government.
COVID-19 Subsidies: HomeBuilder Construction and Renovation
The Australian government has taken significant steps to bring the residential construction industry back on track. The tactful implementation of these regulations and policies intends to boost the industry and help it recover from COVID-19.
Under this grant, you’re entitled to $25,000, which you can use to construct or renovate a home. To qualify, the owner-occupier must be:
- A living entity and not a trust or company
- 18 years of age or above
- A citizen of Australia
- Able to meet any one of the two available income caps (below)
For a couple, the income cap is $200,000, and for an individual, it is $125,000. Also, the applicant for HomeBuilder grants needs to be the registered owner of the land on which construction will take place. When the construction or renovation process gets completed, the owner must live at that property and consider it the principal place of residence for at least six months. The grant applies to all the contracts that have been signed between 4th June 2020 and 31st December 2020.
Stamp Duty Fee Discounts
If you are a home buyer and have signed your contract between 4th June 2020 and 31st December 2020, you will be exempted from stamp duty or conveyance duty. This step by the government has encouraged many to get their home constructed after the pandemic.
How Much Will it Cost Me This Year?
Building a house in Australia in the year 2021 will definitely be more costly than in the past. But like before, the same several factors will affect your average expenditure. Factors like the location, the size, the fixtures and fittings, and the availability of resources near the site.
Also, know that the price advertised on billboards and hoardings by builders is the base price. They have nothing to do with the final price of your home when it is fully constructed. If you are interested in knowing the all-encompassing expenditure, which involves carpeting, landscaping, driveways etc. then best not rely on these “starting rates”.
Assuming you are planning to construct a house with 150 to 170 square metres of carpet area, then you can consider the following rates as an indicator of what you might need to pay the builder:
- For a budget-friendly basic home, you will need to pay somewhere around $160,000 to $190,000. And if you are looking for a turnkey package, add $18 – $20,000 to the cost.
- For a standard home with three bedrooms, you will have to spend at least $180,000, and the price can go up to $200,000 for a four-bedroom home. In this case, the turnkey package can cost you about $20-22000 more.
- For a premium and high-end home, you need to pay between $200,000 – $220,000. Add $22-25000 if you want a turnkey package.
Here are some of the factors that affect the cost:
Site Costs/Cost of the Land
The site cost is basically the amount you need to pay for preparing the block of land before commencing with the construction work. Generally, your builders will take responsibility for these tasks and add the expense on top of the house building price, depending on the location, slope, and size of the land block. Site cost expenses involve site survey, site clearance, retaining walls, fences, water, sewer, gas, electricity connections, soil tests, fencing, etc.
Fixtures & Design
After finalising your house plan, you might want to make some final changes like the type of fittings and fixtures, designs, wall colours, etc. Keep in mind that your builders provide basic fittings and standard fixtures, and basic materials at basic costs. When you ask for these alterations as per your choice, the builders will charge extra to meet your demands. You may want to upgrade and alter the tiles and colour bonds to be used for your roof, the fixtures and fittings, the tiling and the electrical layout as well. With each of these changes, the expense on your home will rise.
Extra Costs You Should Allow For
You should always make room for these extra costs that you can incur at any moment during the construction of your dream home.
- The Slope of the Block: If your land block has slopes, you will have to pay extra charges for foundations and make it flat. Construction work always gets easier when the block of land is flat.
- Soil Quality: During soil tests, the engineers will drill boreholes into the land and collect samples for testing. The M classification is the best for construction purposes. In case the soul type is clayey, rocky, or sandy, you may have to pay an extra amount to improve the quality of the soil.
- Flood Prone Areas: If your site is in a flood-prone area, then the floor level needs to be raised above the natural ground level.
Building your own home can be one of the best experiences of your life. It’s worth it to create a personal space that works best for you. If you plan your finances carefully, the entire process can be hassle-free and convenient. Keep the above points in mind while planning your budget, and you will be able to see your dream home come to life.