While increased construction costs have been expected as a result of the pandemic, the extent has been surprising. Since last year, building costs have increased by 14 percent, skyrocketing Perth into Australia’s most expensive city to build in.
The spike can be attributed to various causes. According to the Financial Review, the harsh COVID restrictions in Western Australia led to a labour shortage that is now being exacerbated by competition between mining and state infrastructure projects. The smaller size of Perth’s market compared to Melbourne and Sydney has also put it at more risk of inflation. The Sydney Morning Herald adds that the rising costs of fuel, freight and electricity are impacting suppliers’ bottom line and forcing their prices to increase.
These figures are certainly disheartening, but to ensure you won’t need to put your project on hold, we have a few strategies to keep costs as low as possible. We engage with a few, select builders that are committed to working with Leanhaus and give our projects priority. These builders have carpenters on staff, so they don’t have to subcontract any carpentry and you’re aware of the cost and quality from the start. We also communicate with our suppliers directly, so we’re informed of future price increases and material shortages as early as possible.
However, we do still need to respond to the industry circumstances. With these accounted for, our three builders have indicated that clients planning to begin construction in late 2022 and early 2023 should budget for approximately $3700 to $4000 per square metre. This applies to the total built area of a new home, including covered outdoor areas and garages. Where you sit in that range will depend on the complexity of the site and the desired finishes and inclusions for your home. To ensure there are no surprise costs down the line, all of our builders are offering fixed price lump sum contracts.
These figures are more than what the Perth market has been accustomed to, but our goals remain the same: to offer healthy, environmentally conscious homes that provide long-term savings at exceptional value. To do this, we build to a significantly higher specification than is required for 7-star homes. To ensure proper insulation, our homes are designed to be completely airtight with extra thick walls, upgraded insulation and double-glazed windows and doors. For improved comfort and interior air quality we include a heat recovery ventilation system and an air conditioner to use when necessary. For lower efficient energy consumption, we also include heat pump hot water systems and full electric appliances. Other non-standard upgrades such as high ceilings and timber linings can be included. All of these design principles help ensure that our homeowners receive long-term savings and show that there’s still significant value in building new passive homes today.
We’ve even been able to observe the benefits of having such a home firsthand. After moving into our new Passive House principled home in May 2022, we can report an average internal temperature of 22 degrees, with no lower than 19.8 recorded. In other words, we’ve been enjoying t-shirt weather in our home all winter without the need for additional heating (and the hefty bills that come with that).
The further increase in construction costs this year may make your new build more challenging, but that doesn’t mean it needs to be delayed. We can help build a home that’ll offer long-term comfort and savings within a realistic timeframe and budget.
Words by Ellie Prober with Ben Caine