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Investors hit hard as building costs explode
Investors have been hit hard as construction costs outpace inflation across much of the country, with soaring import and logistics expenses driving up the price of new homes.
New data has shown that the average cost to build a new home has risen at a faster rate than inflation in several key markets.
According to Australian Bureau of Statistics (ABS) and OpenLot.com.au data, inflation for FY2024 was 3.8 per cent, while construction costs rose by between 4.9 and 9.2 per cent across five of the nation’s states and territories.
Across the country, Tasmanian owners have been footing the bill the most, with housing construction costs rising by 9.2 per cent, the highest level nationwide.
Data showed that the average cost in Tasmania was around $392,000 in FY2024, and jumped to almost $428,000 in FY2025.
OpenLot.com.au CEO and Founder Qi Chen said that a range of factors is driving the increased building costs nationwide.
“In both the Northern Territory and Tasmania, high import and logistics costs take a toll,” Chen said.
While Tasmania saw the highest year-on-year cost increase, Victoria continues to lead the nation as the most expensive state to build new dwellings, with a new build costing an average of $589,000.
Chen said that although building in Victoria and NSW comes with high upfront costs, the scale of new housing projects has been sufficient to offset some of those expenses.
In South Australia, construction costs have risen above the $400,000 mark, growing by 8.2 per cent to $424,000
Western Australia rose by 7.2 per cent, climbing to almost $479,000, while Northern Territory, Victoria, NSW and Queensland all grew by between 2.8 and 5.5 per cent.
The ACT was the only state where the cost to build a new home fell over FY25, dropping by 0.5 per cent.
Chen said that the numbers presented a concerning picture regarding national housing construction.
“A sophisticated, innovative economy like Australia’s ought to be able to build more affordably.”
“This is a challenge builder, suppliers and policymakers must collaborate on to modernise building practices and approvals."
He said the increased construction costs had forced consumers to make tough choices about home size and fittings.
“In new neighbourhoods, some consumers are reacting by trimming their expectations,” he concluded.