Are you the king or queen of wishful thinking? I love that 1990s hit pop song by Go West. And while being the king or queen of wishful thinking might be a great plan to get past a broken heart, it’s not going to cut it when it comes to planning your home build project.
Do you-
- Wish you’d started your project five years ago?
- Wish you’d bought before real estate prices skyrocketed?
- Wish you’d taken advantage of the homeowner grant?
- Wish you’d built when construction prices were lower?
For all the wishing in the world, it isn’t going to make any difference to the real and current climate of the residential construction industry. So let’s get real for just a moment.
The Australian Bureau of Statistics (ABS) releases producer price indexes per Industry, including House Construction. Let’s use this information to apply some actual estimations.
Imagine for a moment that friends of yours built a custom four-bedroom home with two living areas and a double garage back in 2019. We’ll estimate the gross floor area at 370m2 and that the house was able to be constructed for $900k, including GST. You know you love the style and size of this home and think something similar could be perfect for you.
If we apply the Producer Price index as determined by the ABS, the cost of that same home, at the same size and with similar specifications, would likely cost approximately $1.08m to construct in 2022.
There is no way of knowing where the producer price index is heading in the future, but if we project an increase of 12% in 2022, that home would likely cost just over $1.2M to construct in 2023.
Let’s come at this from a different direction. If your budget were fixed at $900k, let’s see how much house we can likely get using those same projections.
From this modelling, a $900k budget could get you approximately 370m2 in 2019, but that same budget will only buy you 275m2 when constructing in 2023.
Are you willing to create a smaller home to reduce the potential cost of your home?
In Home Build Mentoring, we often speak of adopting a growth project mindset. This mindset enables us to change the course of your project as required to meet realistic expectations for the budget and project brief. Changes to the direction of your project needn’t be seen as a devastating compromise but rather a directive for a successful project outcome.
Wishful thinking won’t cut it here, but strategic planning for your project certainly will, and I’d love to help you establish that.
