In Perth and WA, rising building costs have surged significantly in recent years. A recent study shows construction costs have jumped by over 40% since the COVID-19 pandemic. The sharp increase in both material and labor costs, combined with steady housing demand, has made building a home in Western Australia more challenging. While costs have risen most sharply in regional areas, even Perth’s more affordable suburbs have seen notable increases. Here’s what homeowners and potential buyers need to know about the current market.
Where is the Cheapest to Build in Perth?
Some reasonably priced options are still available in Perth if you are trying to build your home on a limited budget. According to OpenLot, Camillo-Champion Lakes, just south of Perth, is the most affordable location, with an average construction cost of $287,151. It is an excellent option for First-Time Buyers and frugal investors. Ellenbrook costs an average of $312,581, and Baldivis, which costs $326,189, are right behind it. Wellard-Bertram and Brabham-Henley Brook are also affordable options. For those who find more central suburbs too pricey, these places offer a desirable combo of affordability and simple access to Perth’s amenities.
The Most Expensive Areas to Build in WA
At the other end of the spectrum, regional WA is seeing the highest construction costs. The highest average building cost on the list is $571,295 in Busselton. This seaside town is well-known for its way of life but costs more. The Mindarie, Quinns Rock, Jindalee region, and Augusta are not far behind, with typical development costs exceeding $400,000. Regional solid demand and the rising price of carrying supplies and labour to these remote locations all add to the higher expenses here.
It’s worth noting that regional Western Australia construction usually costs more than $30,000. According to the data, construction costs have climbed 13.6% in remote regions but only 6% in Greater Perth. It demonstrates a clear “regional premium” for developers seeking sites outside cities.
Why Are Building Costs Rising?
Many factors are responsible for an increase in building costs in Western Australia. A strong housing market and difficulties with the global supply chain play a significant role in the rising labour and production expenses. However, it is more than just these external factors. Many homeowners are boosting their building expenses to capitalise on the recent surge in property values.
Qi Chen, CEO of OpenLot, says that when housing values grow, people will spend more to develop a new home in a suburb. This tendency is most evident in Western Australia, where property prices are so high that construction costs are rising even faster.
The Land Price Surge
It’s not just the cost of building that’s on the rise. The price of land in Perth has reached its highest level since the 2007 economic boom. According to the Urban Development Institute of Australia (WA), the average price for a new block of land in Perth’s metropolitan area now sits at $305,177. This marks a 25% increase over the previous year and a 9.5% gain in only one quarter.
These price rises are driven by a scarcity of new homeland in Perth and the neighbouring areas. Land prices are expected to grow even more as demand continues to exceed supply, making it more challenging for new home buyers to enter the market.
How First-Home Buyers Are Managing
Despite rising costs, Western Australia remains one of the most affordable states for homeowners. REIWA CEO Cath Hart has noted that first-home buyers have remained active, making up 38.1% of the owner-occupier market. The average loan size for first-time buyers now sits at $475,393, a 17% rise over the past year.
Those considering building a new house must anticipate escalating prices and plan accordingly. While Perth may still be cheaper than other major Australian cities, continued price increases in both land and construction make cautious planning and competent financial guidance more necessary than ever.
Nfinity Financials understands the issues that new home purchasers and builders encounter. Whether you’re a First-Time Buyer or an Investor, our staff is here to guide you through the financing process and make the most of your Investment.
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