$85k price surge on new homes

July 21, 2022 BY

Surf Coast and Geelong homebuilders are feeling the pinch of rising construction costs. Photo: SUPPLIED

THE COST of new homes has skyrocketed by as much as $85,000 in the past year as builders struggle with supply and labour shortages.

Australian Bureau of Statistics building permits data released last week revealed Surf Coast and Geelong homebuilders are paying between 12 and 20 per cent extra compared with the previous financial year.

Surf Coast Shire had the steepest rise in the region; 336 houses that received permits up to May this financial year had an average estimated construction cost of $561,000.

During 2020-21, 482 approved houses were worth $475,000 on average, meaning build costs are up 18 per cent.

Houses in urban Geelong were worth $367,000 this year, compared with $320,000 during 2020-21 – up $47,000 (13 per cent).

Bellarine and Armstrong Creek properties jumped up by 19 per cent; from $331,000 to $394,000.

Local trends fit with statewide averages, with builds across Victoria going up 13.7 per cent in estimated value.

Builders have pointed to an ongoing nationwide backlog of materials and skilled workers following a surge in building applications during COVID-19 as government incentives encouraged a construction boom.

Approvals have returned to pre-COVID levels this year after a nine-month surge that started in July 2020 and peaked in March 2021 as the busiest period ever recorded in Australia.

Master Builders Victoria has called on the state government to reform its fixed-price construction contract laws, which prohibit builders from passing on unforeseen cost increases to customers.

The industry argues the mechanism is piling pressure on big and small builders and forcing construction companies to go under, including in the Geelong-Surf Coast region.

But the government insists its rules act as an important safeguard for prospective homeowners and prevents them from being hit with unmanageable extra costs.