Regional NSW

The Smartline Report – August Edition

The month in review: Regional NSW

By Herron Todd White
August 2015

Southern Highlands/Tablelands

Construction activity and costs have been steadily increasing in the Southern Highlands. Basic new home construction is considered to be the project home. The majority of new project homes are single storey brick veneer dwellings with a concrete tile or Colorbond roof and configured as four bedrooms, two bathrooms and two living areas. The more recent land release precincts of Mittagong, Braemar, Renwick, East Bowral, Moss Vale, Hill Top, Colo Vale and Bundanoon feature this style of development.

Standards of finish in these homes are average to above average and range between laminate to reconstituted stone kitchen benchtops, gas bayonet heating points to ducted gas heating or air conditioning. New project homes cost around $1,300 to $1,600 per square metre. Back in 2009, the range was $1,100 to $1,400 per square metre. Building costs have increased during this time. We consider the cost increase is due to a variety of factors including: CPI; general cost increases in labour and materials; new BASIX requirements (more insulation, rainwater tanks etc) and a tailoring of technology requirements into new home designs (internet cabling, media rooms and home theatres).

Finishes would include stone kitchen benchtops, underfloor or ducted heating, high ceilings, home theatre rooms and double glazed windows. Construction costs range from $1,600 to $2,500 per square metre. New homes (knock down and rebuild) in older, established pockets of the Highlands close to town centres would fall into this above average category.

Prestige properties are predominantly very large homes on acreage. Rates per square metre range from $2,500 to $7,500 per square metre. These homes feature high ceilings, extensive cabinetry, hydronic in-slab or ducted heating, floor to ceiling glass windows, marble or stone benchtop finishes, high end appliances, integrated audio, home automation systems and cinema rooms.

The building industry is quite busy at the moment in the Highlands with generally strong demand for new housing in the region. Additionally there have been several new land subdivisions at Renwick, near Mittagong and the Darraby Estate at Moss Vale, which have bolstered activity.

The Southern Tablelands offers more choice and affordability options to potential investors with lower price entry levels than the Highlands. Goulburn, with a population of around 24,000 has a steady workforce and is a popular country holiday destination. Due to the high real estate prices in Sydney, we are seeing an increase in Sydney investors building or purchasing investment properties in Goulburn.

Similar to the Highlands, the majority of new project homes are single storey brick veneer dwellings with a concrete tile or Colorbond roof. Generally offering 4-bedrooms, 2-bathrooms and two living areas, these new homes are found in new residential estates on the perimeter of Goulburn township, such as Merino Country Estate, Belmore Estate and Mistfull Park Estate. The standards of finish in these homes are average to above average and range from laminate to reconstituted stone kitchen bench tops, gas bayonet heating points to ducted gas heating or air conditioning. New project homes would cost around $1,300 to $1,500 per square metre. In 2009, these rates were $1,100 to $1,300 per square metre. Above average and prestige homes are at similar rates to the Highlands. There is strong construction activity in Goulburn.

NSW Central Coast

Although limited compared to some regions around the nation, the Central Coast is not entirely starving when it comes to new and developing residential estates. The challenge we face is the continuity of supply and it’s not that the region hasn’t the land available to develop new estates but more so the will or inducement to do so. But that’s a story for another day.

Those estates that have enjoyed new releases bring with them many instructions to provide early valuation advice to the lenders for new housing and accompanying those instructions are details of what is being constructed, to what specification and at what cost – otherwise known as Building Cost Indicators.

We pride ourselves as an organisation that gives our clients not only the latest information available and learned by us, but historical information and how the market is trending. Even the most casual watcher of real estate would agree that the real estate market is moving rapidly, but we often overlook a fundamental aspect of the industry’s drivers – building costs.

While very careful not to name names, we can share the information gathered over time and provide an indication of current building costs within our region.

Basic Project Style Dwellings

By far, most of the new home construction activity in our region is occurring within the Warnervale Release Area toward the northern end of the region. This includes the suburbs of Woongarrah, Hamlyn Terrace and Wadalba.

We see a large representation of new home builders here along with house and land package specialists. The homes provided are most often referred to as project homes. Think standard, basic entry level onground brick and tile dwellings with 4-bedrooms, 2-bathrooms and double garage on a reasonably flat or near level parcel.

Recent contracts we have seen for project home builders indicate a starting point of $1,150 per square metre of living and garage area for a raw building without floor and window coverings, air conditioning etc, but it is more generally expected to be around the $1,250 to $1,350 per square metre.

As specifications, finishes, inclusions, sizes and layouts move beyond the basics, our records indicate that building rates also move upwards and we see rates starting at around the $1,400 per square metre mark and quickly escalating to $1,600 per square metre and beyond once the buyer makes changes to suit their individuality.

House and Land Packages

House and land package deals are coming in at around the $1,400 to $1,450 per square metre mark which sounds like good value as long as the buyer expects to settle for a slightly more compact (smaller) dwelling of around 140 to 150 square metres with a generic level of floor and window coverings, finishes and colour palettes that have been preselected – in other words, an off the shelf type product. Homes of around 135 square metres are coming in at around the $1,600 to $1,700 per square metre mark.

These rates may vary slightly up or down depending on land quality, contour and BASIX requirements. Interestingly though, in the currently strong market, we have noted that building cost rates for some house and land package specialists have shown a little inconsistency and we wonder whether this is demand driven or a rise in labour and materials costs not yet seen by others.

Private Builders

Private builders are unable to compete on price within the project home builder market as they build homes designed and suited more for the individual. The ability to order or buy in bulk by the project home builder just isn’t available to them – it’s a different market entirely. Many argue that prospective home builders using private builders get the home they are prepared to pay for and there is a certain truth in that argument, but it comes at a cost. Seldom do we see private builders’ costs fall below the $1,700 per square metre mark with floor and window coverings, air conditioning, driveway and landscaping to be added.

Architectural and High Specification Homes

We don’t get to see all that many building cost indicators for architecturally designed homes in our region and we suspect this is due to the fact that those able to afford them usually have a lesser need to rely on mortgage finance.

The profile of those having homes designed by architects and constructed by contractors considered to be in the master builder category are owners of beachfront or other waterfront properties or certain rural residential areas.

The builders of these homes are distinctive in their approaches to their projects, in fact they are more like project managers than the average project home builder and when visiting their building sites, suspicious stares are replaced with genuine handshakes and an accompanying tour of the project. The sub contractors of these builders are also more likely to be wearing socks with their work boots.

The differences are also obvious in the types of materials used, level of finishes seen, light and spatial use, colour palettes etc. There is most often an interior or exterior designer involved in addition to the builder for these types of builds and the standard of the finished dwelling is just as obvious.

This comes at a cost though and from the projects we have seen, building costs will nearly always start above the $2,500 per square metre mark with some homes finishing at around $4,000 per square metre.

Granny Flats

Let’s look at granny flats and second dwellings. They have been around for a while now and have grown in popularity with the passage of time. Some property owners have taken advantage of the town planning legislation available to them and have constructed a second dwelling in their backyards. Most often, they are separately rented and while the property is usually unavailable for subdivision and separate sale, the income received has proven handy to owneroccupiers and attractive to investors.

The typical granny flat or second dwelling has one, sometimes two bedrooms, bathroom, laundry and combined living, meals and kitchen area with parking available somewhere off the street to keep within the rules.

Some suburbs at the northern end of the region, such as Killarney Vale and Gorokan, have also been trending towards this option.

A sure sign that the granny flat or second dwelling sector is here to stay, or depending on who you’re talking to, a passing fad, is the increasing number of building contractors focusing on this type of construction, judging by the vehicle and trailer signage and ads in the classifieds.

Possibly due to their size of around 60 square metres, the projects we have seen indicate there is limited flexibility in design with this product and construction costs generally range between $1,800 and $2,000 per square metre.

Rise in Building Costs

For this month’s review, we are also comparing the cost of building today with the costs recorded in 2009.

Interestingly, we are seeing that generally, the cost to build a standard project home in this region has remained pretty much the same over this time with little identifiable exception. It seems unlikely, but we are confident that this is the case. We are constantly hearing someone rattling on about business efficiency levels, cost savings, production output etc and because we don’t see the home building industry as a slowly evolving one, this may be the reason building costs in this segment have remained fairly constant.

We would also be confident that like any other industry or sector, clients and customers are more aware of their position in the marketplace which leads to greater bargaining power and ability to keep a lid on costs.

That’s generally the case for the project home and house and land package segments and while we would love to provide an insight into the rise, if any, for higher end building costs, we have an insufficient data sample at this time. We suspect however, that like other segments of the home building industry, there has been little increase in costs since 2009, but we will keep a close eye on this over the next few years.

NSW Mid North Coast

The Mid North Coast market over the past 12 months has been characterised by a shortage of quality stock and strong demand from both investors and owner occupiers, resulting in capital appreciation as a function of rental increases and strong yields.

This has caused a on flow effect to building rates within the residential market with building activity and costs increasing for renovations and new constructions.

Signs of increased building activity have been most evident within Port Macquarie residential subdivisions such as Ascot Park, Sovereign Hills, Brierely Hill and Emerald Downs, with other small infill subdivisions closer to the Port Macquarie CBD being almost exhausted.

Typical onground, brick 3- to 4-bedroom, 2-bathroom houses with tile or Colorbond roof and built-in 2-car garage generally cost from $1,300 (120 square metres of living area) to $1,400 per square metre to build exclusive of outdoor entertaining areas. Such houses generally have laminated kitchen benchtops and standard PC items.

Mid priced onground brick 4-bedroom, 2-bathroom houses with tile or Colorbond roof and built-in 2-car garage generally cost from $1,400 (200 square metres of living area) to $1,600 per square metre to build exclusive of outdoor entertaining areas. Such houses generally have higher or raked ceilings, stone benchtops and mid range PC items.

With the increase in demand for the rental market, new residential homes with granny flat and dual occupancies have become more popular within new subdivisions. These consist of 3-bedroom, 2-bathroom and double garage and an attached 2-bedroom, 1-bathroom granny flat with onsite parking. Building rates for theses have been higher than the normal house due to additional PC areas. Rates range from $1,400 to $1,900 per square metre depending on the quality of the build.

Generally these houses have high quality finishes, open plan living, high ceilings, in built cabinetry, additional bathrooms, butler’s pantry and multiple levels with a floor space of upwards of 250 square metres.

Albury/Wagga Wagga

In recent years the Albury and Wagga Wagga new housing market has been steady. Nothing too exciting to report. Generally costs to build a new house in Albury were cheaper per square metre than in Wagga Wagga. Rates were approximately $1,000 to $1,200 per square metre in Albury compared to $1,100 to $1,300 per square metre in Wagga Wagga for similar types of dwellings.

The past 12 months has seen a relatively large increase in demand for new housing. This has pushed up prices in both Albury and Wagga Wagga with rates reasonably similar for both regions at between approximately $1,200 and $1,500 per square metre. This increase in demand has also seen an increase in builder options with smaller individual builders buying vacant land and building spec houses as well as being contracted to build.

Areas that appear to have seen the biggest surge in new housing are Boorooma, Bourkelands, Forest Hill, Gobbagombalin and Lloyd in Wagga Wagga and Glenroy, Hamilton Valley and Thurgoona in Albury.

It will be interesting to see whether the new APRA lending rules curb the recent large increase in demand in these areas in the short term and what effect they will have in the long term. Time will tell but lenders and buyers alike should probably be more cautious looking forward.


So how much does it cost to construct a single level, brick veneer dwelling in the Leeton/Griffith area? A basic 4-bedroom, 2-bathroom dwelling will run between $1200 and $1400 per square metre. Smaller dwellings of around 130 square metres run closer to $1400 per square metre and generally feature laminate bench tops, wall mounted split system air-conditioning and part wall tiling in bathrooms. These dwellings are the product of choice for developers and a large number of turn key properties being constructed in Griffith and Leeton at present.

Owner-occupiers generally like a few more bells and whistles, such as raised ceilings and door heights (a more recent trend), ducted reverse cycle heating and cooling, full wall tiling in bathrooms, bamboo flooring, brand name appliances, soft closing kitchen cabinets and the new must have, the butler’s pantry. Depending on how heavy handed on the tick list you go, the little extras will push up rates to $1400 to $1600 per square metre and dwelling sizes generally range from 230 to 260 square metres.

If you like extras on your extras such as CBUS, glazed windows, solar power, automated window furnishings, sound systems, security systems and commercial ovens that are better than your girlfriends’, your rates enter the $1,600 to $1800 per square metre band. Construction costs have increased in all segments of the market. The same entry level dwelling will cost $200 per square metre more than it did in 2009. It is more difficult to get a precise cost increase on middle market as costs have increased but so too has the level of inclusions. Caesarstone was considered a point of difference in 2009 but in 2015 is a general expectation. The volume of prestige builds has declined since 2009. The increase in building costs and lack of vacant sites available in sought after residential locations have resulted in an increase in the number of people acquiring and renovating larger, older homes.


Construction in Bathurst and Orange has seen a sustained expansion over the past three years. This has been in line with an increase in the local population and a continued desire for new homes as subdivision land becomes available.

As construction has increased so has the number of builders and building firms. This has effectively resulted in building costs remaining steady over this time. On a macro scale this is consistent with relatively limited growth in inflation and incomes.

Local building costs are generally lower than quoted in Rawlinson’s or Cordell’s construction cost guides. This means that replacement costs quoted by insurance companies are often above what might be the actual cost to replace in the local area.

Building costs for average brick veneer dwellings can range from $1,200 to $1,500 per square metre on an analysed living area basis. It is typical to find dated dwellings or dwellings of inferior construction below this mark, yet it is rare to find the market stretch beyond this point despite the possible inclusion of above average furnishings such as glass light switches or a fully kitted media room.

Where this established norm can fall short is for double brick dwellings. There are very few new dwellings of such construction in the local area. On the east coast of Australia the raw materials for such construction are less available leading to the preference for brick veneer. This has resulted in an even more pronounced separation between what the local market is willing to pay for such a dwelling, more in line with the above quoted construction costs for a new brick veneer dwelling, and what an insurance company would quote as the cost to rebuild.


Housing construction in Dubbo is booming at present due to the high volume of vacant land sales which have occurred in the past six to 12 months. Such is the demand that many land sales are occurring off the plan with a delayed settlement of three to six months (or more) depending on the stage of construction. This means the majority of local builders are booked up months in advance which is pushing construction costs higher than ever before.

A typical 4-bedroom, 2-bathroom, brick veneer dwelling with double garage now costs between $1,250 and $1,450 per square metre to construct. We are seeing some construction costs as high as $1,600 per square metre and still some as low as $1,100 per square metre, depending on size and quality of fitout.

There is still strong demand from investors for new homes which is resulting in builders and developers offering house and land packages. Most house and land packages are targeted at the investor or first home owner market and range from $350,000 for a 3-bedroom, 2-bathroom dwelling with single garage on a dual occupancy site up to $450,000 for a 4-bedroom, 2-bathroom dwelling with double garage on a standard sized residential allotment.

Record low interest rates are definitely assisting with the housing construction boom and we are seeing many more high cost and prestige dwellings being constructed, particularly in the Southlakes and Grangewood Estates, due to affordability. A two storey dwelling comprising 5-bedrooms, 5-bathrooms, a triple garage and inground pool under main roof (621 squares metres in total) was recently constructed by a local builder for $700,000.

Please note that information in this publication is subject to change without notice. Smartline assumes no responsibility for any errors, omissions or mistakes in this document. © Smartline Home Loans P/L 1999 – 2015. Australian Credit Licence Number 385325


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DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.