8752.0 - Building Activity, Australia, Dec 2008 Quality Declaration 
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 17/04/2009   
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FEATURE ARTICLE: A TWENTY YEAR HISTORY OF THE COST OF BUILDING A NEW HOUSE


INTRODUCTION

Over the last 20 years, the cost of building a new house has increased nearly fourfold. The increase can be partly explained by a 32.7% increase in the average size of new houses.


Method

The data used in this study relates only to new, completed houses and was obtained from the quarterly Building Activity Survey. The costs represent the actual completion value of the residence based, where practicable, on the market or contract cost of jobs including site preparation, but excluding the value of land and landscaping. In other words, values given represent the price of building the house only.


Average cost per new house

The average cost of building a house in Australia almost quadrupled in the twenty years to June 2008, rising from $65,000 in 1987-88 to $236,000 in 2007-08. Graphs 1 and 2 show that the cost of building a house in Australia has been rising, with the rate of increase greater in the second decade.

In 1987-88 the average cost to build a new house ranged from $56,000 (WA) to $72,000 (VIC and ACT), with a house in Victoria and the Australian Capital Territory costing 1.3 times the average cost of a house in Western Australia. Costs between the States remained similar until about 1989-90 when they began to diverge. The divergence continued through the 1990s and became more pronounced after 2000-01. In 2007-08 the average cost of a new house ranged from $182,000 in South Australia, to $313,000 in the Northern Territory, with a new house in the Northern Territory costing 1.7 times the cost of a new house in South Australia.

Graph 1: AVERAGE COST PER NEW HOUSE
Graph: Graph 1: AVERAGE COST PER NEW HOUSE


Graph 2: AVERAGE COST PER NEW HOUSE
Graph: Graph 2: AVERAGE COST PER NEW HOUSE


The average annual percentage change over two 10-year periods shows increases for all states (Table 1). The greatest rate of increases during the past ten years have been in the Northern Territory and the Australian Capital Territory.

Table 1. AVERAGE COST PER NEW HOUSE
1987-88
1997-98
2007-08
1987-88 to 1997-98
1997-98 to 2007-08
$('000)
$('000)
$('000)
Average annual % change
Average annual % change
NSW
67
124
272
6.3
8.2
Vic.
72
113
226
4.7
7.2
Qld
60
110
240
6.3
8.1
SA
60
90
182
4.3
7.3
WA
56
107
241
6.7
8.5
Tas.
56
95
206
5.4
8.0
NT
68
125
313
6.3
9.6
ACT
72
113
284
4.5
9.7
Aust.
65
113
236
5.7
7.7



OTHER STATISTICS OF RELEVANCE

There are many factors influencing the increase in the cost of building a new house. One factor is changes in structure which has seen increases in floor area over the same period.


Size of houses

The average size of a new house has increased since 1987-88 but at a slower rate than the cost of building a new house. During this time the average size of a new house has increased by 32.7% from 181m2 in 1987-88 to 239m2 in 2007-08. The states with the largest average increase in size were the Northern Territory at 57.9% and Australian Capital Territory at 56.2% while South Australia had the least at 11.2% (Table 2).

Table 2. AVERAGE FLOOR AREA OF NEW HOUSES
1987-88
1997-98
2007-08
1987-88 to 1997-98
1997-98 to 2007-08
m2
m2
m2
Average annual % change
Average annual % change
NSW
181
222
252
2.1
1.2
Vic.
179
208
241
1.6
1.5
Qld
177
215
247
2.0
1.4
SA
172
198
191
1.4
-0.4
WA
202
222
242
1.0
0.9
Tas.
158
191
197
1.9
0.3
NT
140
191
222
3.1
1.5
ACT
165
189
257
1.4
3.1
Aust.
181
214
239
1.7
1.1



Conclusions

The average cost of building a new house has increased substantially since 1987-88, on average increasing by 6.8% each year. The average size of a new house has increased 32.7% from 181m2 in 1987-88 to 239m2 in 2007-08. As a result of the above and other factors, the relative cost of new houses has increased in the twenty years to June 2008.

Previously published articles on this topic:

Average Value of New Houses, March 2002, (cat. no. 8731.0).

For more information on this topic contact Ilse Gulpers on Adelaide (08) 8237 7597.