Surge in building costs turns buyers to look for existing homes

8 Dobie Court, North Geelong, sold for $1.22m at auction.

A surge in building costs and uncertainty over construction timelines is turning more families to existing homes to break into the market.

A massive five-bedroom residence on the Geelong Golf Course residential estate earned North Geelong sellers a $32,000 premium as two bidders contested the about 455sq m house at auction.

Buxton agent Matt Plunkett said a third bidder didn’t get a chance to make an offer as the bidding got off to quick start at 8 Dobie Court.

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The house sold for $1.122m.

The home offered families views from the living area over the fairways and a modern designed home with luxury finishes.

“That had a fair bit of interest because some buyers are swaying towards buying an established home as opposed to building,” Mr Plunkett said.

8 Dobie Court, North Geelong, sold for $1.22m at auction.

“With building we don’t know the final building costs and also the timeline. By the time they calculate it all together they are starting to buy established.

“One of the bidders was in that boat – they were due to build but changed their minds and decided to bid.”

Mr Plunkett said it was a 49 square home, which would be expensive to replicate.

“If I was to have a guess, I would say about around $750,000 to build that and then you buy the block of land for $450,000,” he said.

“So, it’s the option to move in and maybe save $100,000 and maybe even a bit more.”

Recent data analysis from the Housing Industry Association showed the cost to build a typical Australian house had climbed $94,000 in 15 months.

8 Dobie Court, North Geelong, sold for $1.22m at auction.

Analysis of the Australian Bureau of Statistics’ most recent building approvals data shows the average price of a new house approved in the nation’s private sector in May was $413,436.

Remarkably, the figures also reveal the cost of building a new home actually declined for the first half of the Covid-19 pandemic to $319,259 in February, 2021.

HIA chief economist Tim Reardon said this was due to a glut of first-home buyers building smaller, cheaper homes after the federal government offered $15,000-$25,000 HomeBuilder grants before it was concluded in March, 2021.

In Victoria, which is building more new houses than any other state, there was a more than $32,000 jump in the typical house’s approved construction costs from March to April.

Mr Reardon said he believed cost increases would slow as the nation pulled back from building 150,000 new houses in the past year to a more typical 108,000 by 2024-2025, but the coming 12 months is likely to be the second fastest growth period in the past 40 years.

with Nathan Mawby

The post Surge in building costs turns buyers to look for existing homes appeared first on realestate.com.au.

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Surge in building costs turns buyers to look for existing homes

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