According to Rider Levett Bucknall, a construction consulting firm, the average lower starting cost to build a single-storey house in Perth is $2,300 per square metre, and the average higher starting cost is $4,450 per square metre.

Those prices sound too daunting, don’t they? Trust me, as someone who’s still trying to get her first home, those prices aren’t making me comfortable.

That’s why, to understand why this is the case, I researched the numerous factors that may affect the cost of building a home, such as home builder fees, and why building costs are so high these days.

Let’s discuss the results of my findings.

Factors that May Affect the Cost of Building Your Home

The Cost of the Land

Unsurprisingly, the land where you’ll build your house is a major factor you need to consider in your budget. Depending on your location, you may either have to pay a premium or save a lot of money when it comes to land.

For starters, the closer you are to the city centre, the higher the land prices you’ll encounter. Natural features can also increase a land’s price, as those that are near the coast or the Swan River tend to have higher prices.

Of course, you can get cheaper land if you choose to live in suburbs that are a bit far from the city centre, like Armadale and Kwinana. 

To give you a rough idea of the current status of land prices in Perth, here’s a table that uses the data provided by The Real Estate Institute of Western Australia (REIWA) as of May 2024.

Here are some suburbs that still have land for sale in Perth. Some of the suburbs listed here are featured in our list of the best suburbs in Perth.

If you want advice, make sure to strike a perfect balance when it comes to choosing which land to build your house on. Make sure to only set a specific budget for land, and be prepared to look for options if your preferred location is above your budget.

Also, make sure the house you’ll build is appropriate for the area. If your suburb is filled with double-storey homes, it’s impractical to go for a single-storey home.

Furthermore, it’s also unwise to build the most expensive house in the suburb, as you may encounter the risk of overcapitalisation.

House Size

Now that you have the land, it’s time to consider how large your house will actually be. A good way to know how large it should be is by first determining how many people will live in it.

If you’re still single and without a family, then going for a simple, single-storey home wouldn’t be a bad choice. 

This option lets you get away with building only essential rooms, like the bedroom, bathroom, and a general open area that can function as a kitchen and living room. If you prefer, you may also add an office room if you’re working from home.

However, if you’re planning on starting a family, it’s a better idea to go for a two-storey home that has at least three bedrooms so your kids can have a room of their own.

Just remember that the larger a house, the costlier it’ll be, as it will require more materials and labour to be built. Adding more rooms can also increase the costs, as new walls, electrical wiring, and water pipes will also be added.

Construction Crew

Your construction crew is another important factor that can determine how expensive your house project will be. You might initially think that going for a cheap home builder is good, but that’s usually not the case.

That’s because there are some things you should consider first before hiring a crew (How do I choose a builder in Perth?). The most important thing is experience, as it ensures they have the necessary knowledge to build a home that lasts.

Another is expertise. It’s crucial to pick a crew that has a diverse team of professionals like bricklayers, roofers, and electricians. 

Materials Used

Of course, the choice of materials can significantly impact the cost of building a home. 

Higher-quality materials tend to cost more. Premium materials, such as solid hardwood flooring, granite countertops, or imported tiles, can significantly increase the overall construction cost.

If quality is a very important factor for you, it’s not a bad idea to pick materials that are available locally. That may include floorboards that are made from timber grown within Western Australia, like jarrah and karri.

Since they’re produced locally, they don’t have the expensive transportation costs that an imported building material might have.

If these materials are still too expensive for your budget, there are more cost-effective options available. An example is concrete sheets, which are made from a mixture of cement and cellulose fibres pressed into flat boards.

You can also use corrugated metal on your interior walls and backyard sheds to create an industrial look and aesthetic for your home. They are typically cheaper than natural timber and bricks, but they must be painted regularly to avoid rusting.

Recycled bricks and timber can also be used to build your home cheaply. 

Going for this option is good, as not only will you reduce the amount of waste that ends up in landfills, but you can also go for a rustic, weathered appearance that appeals to cottage or beach house styles.

If you’re going for a minimalist style, you can also try using recycled cargo containers as a base for your home.

Design Complexity

Another key factor that affects the overall cost of building a house is how complex its features and layout will be. Let’s start with one of the most important parts of a house: its foundation.

Simpler ones, like a slab-on-grade foundation, are cheaper to build as they require less labour and material. Meanwhile, homes that will use foundations like pier-and-beam foundations are more expensive to build.

Furthermore, larger homes will need more load-bearing walls and cantilevers to be built. Adding a basement to your home adds more costs as it’ll require more foundations to remain sturdy. 

Now that we’ve discussed the foundation, let’s move on to architectural features. Make sure to pay close attention to how much customisation you’ll include in your home. 

Intricate architectural features such as curved walls, vaulted ceilings, or unique roof designs are costlier as they require specialised construction techniques and skilled labour. 

A complex floor plan with irregular shapes, multiple levels, or unconventional room arrangements can also affect construction efficiency. More corners, angles, and non-standard room sizes can lead to increased labour and material costs.

Finally, there’s also the issue of implementing energy-efficient and sustainable designs for your home. Things like advanced insulation and passive solar designs are still uncommon and thus require special materials to be implemented.

Inclusions

Basic inclusions are the essentials required for a functional home. These include windows, doors, lighting, and basic HVAC systems. It also refers to plumbing and electrical fixtures like pipes, wires, and electrical breaker systems.

In my opinion, it’s a good idea to always go for high-quality products when it comes to basic inclusions. Things like doors and windows may pose a security risk if they can be broken into easily.

Furthermore, higher-quality water pipes and electrical wiring require less maintenance, allowing you to save money in the long run. Overall, expect at least a minimum expense of $40,000 for this part.

Site Work

Depending on the current state of the land you bought, you might find yourself spending a lot when it comes to site work. That’s because this factor involves altering the land to prepare it for the construction of a building.

Some common site work projects that are done before a house is built are clearing any obstacles like rocks and trees, as well as sloping and grading the land to remove uneven terrain.

Furthermore, you’ll need to excavate most parts of your land to lay the foundations of your home. 

Other necessary site work you should also consider are the installation of soak wells to keep your property safe from water damage and the construction of a driveway crossover to make your garage easily accessible for cars.

Overall, you can expect an additional $15,000 minimum to complete these site work projects. However, please take note that this cost may rise even higher if you’re planning to do some major landscaping in your yard. 

Finishes

Aside from the basic inclusions mentioned earlier, you can further improve the value and aesthetic of your home by adding finishes to it. These are optional features that can enhance comfort, aesthetics, and functionality.

Some examples are laminate flooring, smart appliances, premium bathroom fixtures, and designer lighting. It also includes window furnishings like blinds, curtains, and shutters.

Because most of the items mentioned here aren’t necessary to have a proper home, you should only buy these items once everything I’ve mentioned earlier is done or is factored into your budget.

Potential Additional Costs

While we’ve pretty much covered every factor that may affect the cost of building your house, there are still some additional costs you should look out for.

A common example is the additional services your house builder must perform before and after building your house. These services include performing soil testing and handling any waste associated with damaged or unused materials.

Furthermore, your house builder might also need to perform trenching around your property so they can safely install utilities like electricity, water, and an internet connection.

Also, there’s the issue of securing permits and clearances from the local government so you can begin the construction of your home. 

When it comes to building permits, the fee for Class 1 buildings like single-dwelling homes is 0.19% of the estimated value (Australian Business Licence and Information Service).

Why are building costs so high?

Global Supply Chain Issues

One of the bigger issues that led to a sudden rise in building costs in Perth is the ongoing global supply chain issues. According to ABC News, the ongoing conflict between Russia and Ukraine is one of the main contributors to this problem.

That’s because Eastern Europe is one of the main producers and exporters of timber, which is a key component in buildings. The conflict has made it harder for suppliers to ship their products outside of the affected areas.

Aside from timber, other building materials like steel, cement, and insulation are still scarce, as the effects of factory closures and transportation delays brought by the COVID-19 pandemic are still felt to this day.

Labour Shortage

Aside from the shortage of building materials, the lack of enough experienced tradesmen who can build homes has led to a further increase in building costs in Perth. 

Going back to the ABC article I mentioned earlier, tradesmen like bricklayers and carpenters are already experiencing months’ worth of backlogs due to the high demand for their services.

A probable reason why there’s a shortage of tradesmen is due to the sudden closure of borders during the pandemic. The lack of new workers forced builders to pay a premium to secure the services of the few tradesmen available in Western Australia.

Lack of Proper Planning from the Government

Lastly, the local and state governments also play a part in why construction costs are so high today. Per the same report by ABC, the Western Australian government introduced stimulus grants to support the construction industry during the pandemic.

At first glance, this program was a complete success, as it initially helped many Perthites secure the funding needed to build their homes while also providing construction companies with the demand they needed to stay afloat.

Sadly, this wonderful program also brought a couple of problems, as the sudden surge of demand made it very hard for construction companies to keep up, resulting in longer wait times and cost escalations for homebuyers. 

As a result of these interwoven factors, the cost of building a new home in Perth rose by almost 16% in the first quarter of 2022.