If you’ve always dreamt of building a new home, you may be wondering how recent events have impacted house construction prices including contractor costs and stamp duty fees. While the repercussions of Covid-19 on the real estate sector have been significant, it’s not all bad news for aspiring home builders and buyers.
The economic response to the Coronavirus has led to many government initiatives designed to help first home buyers finance the cost to build a house. The recent creation of the HomeBuilder grant, and the established First Home Owner Grant, are just two examples of government initiatives that have been designed to help turn real estate dreams into more tangible realities.
The impacts of COVID-19 on the real estate industry
As we’ve seen since early 2020, the property market has not been immune to the economic effects of COVID-19. As for attitudes towards entering the market, the events of recent times have also caused many to reassess how they might enter the market. A recent survey conducted by Savvy has revealed 91.6 per cent of Australians believe property prices may become unaffordable. Even so, initiatives remain in place to help eligible Australians stake their claim in the sector.
What does it mean for you if you want to build a home?
Building your own home is beneficial for many reasons. Firstly, finding a house that meets your every need can be far more difficult when buying an existing home, but when building a new home the personalisation options are almost endless. Secondly, choosing energy efficient options when building your home can save you thousands on electricity and gas costs in the long run.
But what does it look like to build a new home in a post-COVID-19 world? The task may seem tricky, but for those wanting to build a new home, the aftermath of COVID-19 may actually lead to faster construction and cheaper prices for the foreseeable future.
What is the average cost of building a home?
Despite predictions that construction times and costs could improve in the next few years, the actual impact of COVID-19 on the average cost to build a house remains relatively unclear. That being said, the landscape has certainly changed, so let’s take a closer look at how these shifts may impact your bottom line.
When calculating the cost to build a house on your own land, it’s important to make a list of key expenses as you plan to ensure you’re budgeting for all steps and not leaving yourself open to any financial surprises.
Builder and contractor costs
The price you’ll pay for builders and contractors will depend largely on which company you choose to build with. In Australia, a builder’s hourly rate can vary from $70 to $120 and are subject to change depending on your location, the nature of work, and the type of house you’re looking to establish.
Online tools, such as the BMT Construction Cost Table, can be helpful when estimating the cost of building a house as well as a variety of building types including townhouses and residential apartments.
Architecture and design costs
To estimate the cost of hiring an architect in Australia, a site inspection is essential to get the best quote. Architects will either charge by the hour, a fixed fee, or a percentage fee. For the latter, you can estimate that an architect will charge anywhere between 5 and 20 percent of the total cost of your build. When it comes to figures to factor into your budget, an architect can cost anywhere from $800 to $4,500 to prepare designs for a home, as estimated by online marketplace OneFlare.
Council fees and registration
Before you start to build a house, you or your agent must find out from the local council whether you need a planning permit. If so, you must get one before you can get a building permit. A building permit can be obtained from a registered private or council building surveyor. The surveyor will charge a fee to assess your application and either:
- grant the building permit
- request changes to ensure the plans and specifications comply with building regulations.
Fees for registered private or council building surveyors vary depending on who you hire, so it’s important to obtain quotes for these services to factor into the overall budget of your build.
Materials and building costs
Many materials and building costs are considered prime costs, which refer to items that are subject to change during the construction of your home. These include things like fixtures and fittings such as tiles, doors and taps, as these items may change depending on your final choice.
If you’re working with a building contractor, an estimated amount for the costs of materials is provided when signing your building contract. Depending on your specification of the finishes during the build, these prime costs may vary as you make stylistic choices throughout the building process.
Government schemes that are available
First Home Buyers Grant
If you’re entering the market for the first time, the $10,000 First Home Owner Grant (FHOG) is still available for eligible applicants buying or building their first house within Australia. Promising news for those who may have believed their home owner aspirations would melt into mere pipe dreams.
You may be thinking, am I eligible? Which is, of course, the most important question to ask before you start your application. In a nutshell, your answers to seven checklist questions on the Application for First Home Owner Grant (FHOG-Form-02) determines your eligibility to receive the grant. You can also use an online tool to assess your eligibility.
Stamp duty fees discounts
Simply put, stamp duty is a general tax imposed by the state government on the purchase or transfer of almost any real estate. The good news is that most first home buyers are eligible for stamp duty discounts and, in some cases, exemptions. To get a better idea of stamp duty exemptions and concessions by state/territory, you can use a stamp duty estimate calculator online, or refer to your state government’s website for more information.
Recent initiatives such as HomeBuilder were designed with the intention to support confidence in the residential construction sector, and encourage consumers to proceed with plans that may have been put on hold due to the uncertainty of recent times. Applications for HomeBuilder closed at midnight on 14 April 2021, but help to buy a home is available on an ongoing basis for eligible individuals who require assistance with budgeting for contractor costs, builder costs, and stamp duty fees.
Where to begin when building your own home?
Building a home gives you the freedom to enjoy a brand new property that’s been designed just for you. However, as with any big project, careful planning is required.
For first home builders, it’s always best to start by researching the First Home Owners Grant to educate yourself on the financial assistance you may be eligible for. Thereafter, you’re free to choose your home design, find your block of land and decide on a builder who can help you turn your real estate dreams into reality.