You may have noticed that, along with the Australian housing market, material and building costs have increased significantly over the last 2 years. But what has caused this increase and how can you best navigate it?
Normally, we see this type of price rise over 5 years due to inflation and industry growth, but instead we are seeing it over just 2, so this jump in cost feels quite dramatic and even absurd when looking to renovate or extend.
With travel plans off the cards for the past two years due to the pandemic, many have instead been turning to improving and investing in their homes, which has increased supply and demand for the construction industry and in turn, accelerated costs a little faster than normal.
Since the pandemic began, the cost of timber has increased nearly 250 per cent and the cost of steel is at a new 10-year high. Australia is also experiencing building supply shortages due to a global increase in demand for materials. Some of the shortages have also been attributed to the 2019/20 bushfires which destroyed tens of thousands of hectares of softwood plantation that would usually supply the Australian construction industry.
Data from market analysis firm CoreLogic shows Adelaide house prices rose 17.9 per cent in the past year, and 5.3 per cent in the past quarter. Along with the price of real estate, prices have gone up so quickly that they’re no longer on par with the cost of living.
If renovating is unaffordable then home renovations simply will not take place. Issues such as lack of space, unfunctional or outdated kitchens and bathrooms will remain unchanged and homeowner’s won’t be able to live the lifestyles they’re dreaming of. So if you’re looking to renovate, extend or build new in 2022, know that…
The Cheapest Time To Build Is Right Now
In all the years of experience that our Master Builder, Zak, and many other builders have had in the building industry, they have never seen prices in the industry drop. This means that these rises in building costs aren’t temporary, this is the new normal. So, knowing how to navigate the effect this has on you as a homeowner is essential. Unfortunately nothing can be done to lower building costs, but you can reduce the shock and get ahead by making sure you have the right expectations for your project and stop waiting for prices to ‘settle’ or go down.
Invest In Your Home
Because of low interest rates and price rises in real estate, everyone has a lot of equity right now, which is okay if you can afford the debt. It’s important to know that the money you spend on a renovation is an investment rather than an expense. With real estate prices on the rise, any work put into your home right now will be sure to see a financial benefit.
Work Collaboratively With Your Builder And Architect
Engaging an architect or designer directly without the help of a professional builder is a very risky exercise. It’s most ideal to engage a builder who can be intimately involved in the design process and guide the design to suit your budget. A professional builder will manage your design process to make sure your budget expectations stay realistic.
Now that you know why the cost of building has changed and how it will affect your home renovation or extension, download our free ZJ Building Design Guide to get started planning your dream home today.
