The month in review: Sunshine Coast

By Herron Todd White
August 2015

It would appear that construction costs in general for residential dwellings have increased with builders indicating that costs for materials have risen. Labour costs have remained fairly consistent. We have seen some of the workforce that was travelling into mining regions return to the coast employment market.

This would appear to have been good timing given the increased activity on the back of the $2 billion University Hospital currently under construction at Kawana. We note that the strong southern markets (Sydney and Melbourne) have also had an effect on the coast with significant interest from investors as they try to find value and returns.

We have looked at three sectors of housing and how costs have been tracking. The project style dwellings which generally consist of slab on ground houses of brick and tile construction providing 3- or 4-bedrooms has experienced some increases from 2009 with the construction costs ranging generally between $750 per square metre to $850 per square metre based on the total of living area and garage. This has now increased to more like $900 per square metre to $1,000 per square metre.

The middle range of housing generally comprises either a larger slab on ground dwelling (250 square metres) or mid to highset dwelling. These properties have a more contemporary style of design and generally provide 4-bedrooms plus study with higher quality fixtures and fittings including high ceilings, stone benchtops, air conditioning etc. Rates for these dwellings have continued to range between $1,200 to $1,700 per square metre.

The higher end, architecturally designed dwellings have been the sector of the construction market that has continued to increase in construction costs. These dwellings usually comprise various styles between slab on ground, suspended slab and even light weight construction properties. Sizes vary in the vicinity of 400 square metres and above with high quality fixtures and fittings throughout including smart wiring, home automation systems, extensive joinery and stone features. Costs for these dwellings can range from $2,000 per square metre up to however deep your pockets are.

A few years ago there was the ability to buy properties at below replacement cost which didn’t allow for any great increase in building costs. As the market has improved and this ability to buy at below replacement cost diminishes, some upward pressure on these construction costs are being experienced. We also note that the rise of small lot housing is making it difficult to gauge costs as the smaller building size results in a much high rate per square metre given the economies of scale.

One interesting issue is whether a property is being purchased as a house and land package or being built by a third party. The difference in building cost can be in the order of 10% to 20%.