WA Construction Costs: Stable, Not Sinking
I was having a chat with a friend of mine over the last week regarding my thoughts on buying a home in WA at the moment - whether she would be better off going established, or starting from scratch. While predicting the future with certainty is impossible, it’s our thoughts that there are indications that Western Australian residential construction costs are unlikely to see significant drops in the next few years - while in most cases, the price on established homes in Western Australia is rising even quicker than construction costs. Here's what we know:
Recent Trends in construction:
Costs have stabilized: After significant increases in recent years, construction costs in WA have shown signs of stabilization in 2023. The Cordell Construction Cost Index (CCCI) reported a 2.3% annual increase for WA, the lowest among states and below the national average.
Material prices fluctuate: While steel and timber prices have eased, factors like energy costs can still cause volatility.
Labor shortages persist: Skilled labor remains a challenge, pushing up overall project costs.
Factors to Consider when building a home:
Demand and supply: Housing demand in WA remains strong, driven by population growth and economic activity. This high demand could counteract downward pressure on construction prices.
Global factors: Global economic conditions and commodity prices can impact material costs and overall project feasibility.
Government policies: Government initiatives aimed at boosting housing affordability could influence construction costs indirectly.
But what happens when you compare this to the established home market?
Supply and demand:
Limited supply: The current housing market in WA sees a shortage of established homes compared to the high demand from buyers. This scarcity drives prices up. The instant gratification aspect of buying an established home means the competition will continue to be high here, leading to significant cost rises.
Strong demand: Factors like population growth, low interest rates, and economic activity in WA are fueling strong demand for housing, further pushing prices upwards.
Comparison with construction costs:
Construction costs stabilized: While still not cheap, construction cost increases in WA have slowed down compared to the past few years. This makes established homes appear relatively more affordable in comparison. However, the competition remains high here and trends tend to indicate the costs are rising even quicker.
No need to wait: With established homes, you can move in immediately, whereas construction can take months or even over a year. This instant gratification factor adds value for some buyers, leading them to pay a premium for established homes.
Expert Opinions:
The latest CCCI report suggests a return to pre-pandemic cost trends rather than a significant drop.
Industry experts predict stable or possibly slightly decreasing costs in the near future on construction.
The situation can vary depending on specific locations, property types, and market conditions.
Building a custom home can still be a viable option for those who prioritize unique design, specific features, and long-term value.
Consulting with a local real estate agent can provide you with more accurate insights into the current market trends and pricing in your specific area.
Focus on smart design: Partnering with experienced architects like Cynosure can optimize your design for cost-efficiency. We'll help you choose materials and methods that align with your budget and maximize value.
Long-term value matters: Building a unique, high-quality home with Cynosure doesn't just give you a dream space; it also increases your property's resale value when the time comes.
Overall:
It's unlikely that WA construction costs will plummet in the next few years. However, a stabilization or a gradual decrease is more likely due to moderating material prices and easing cost pressures.
Remember, this is just a general overview, and specific project costs can vary depending on factors like size, location, and builder choices. It's always best to consult with qualified professionals for an accurate assessment of your construction needs and costs. Considering both options, along with their pros and cons, will help you make the best choice for your situation.
Ready to build a home that stands out and delivers lasting value? Contact Cynosure Architects today for a free consultation. Let us help you navigate the construction landscape and build your dream in WA!
