Building a house What should I Consider?
Hello guys, if you are reading or looking at this article, chances are you hoping to be involved with residential development, but may not have all the pieces of the puzzle.
Some key questions to ponder before considering development;
- What is the cost to build a home?
- What are the potential returns?
- Is the product what the market wants?
- Are we currently in buyers or seller’s market?
- What is your anticipated time frame to complete a project?
- What is your intent with the development?
- Are you planning on living in it?
- Is it an investment residence?
The following statistical data derived from the UDIA (Urban Development Institute of Australia) state of the land report (2018) suggests some clues as to whether it may be a good time to make the leap.
According to the report;
- Melbourne released 22 990 greenfield homes in 2017, (South East Queensland coming in at 13,268)
- Melbourne released 25,900 Unit completions in 2017 (Second to Sydney at 28,330,)
- The average cost of building a home Australia wide is $1270.80 (June 2018 Australian Bureau of Statistics)
- The median Melbourne housing price is at $281,000. (Second to Sydney at $476,000) which grew by 24%. The strongest annual price growth recorded in metro Melbourne since 2009.
- Due to current economic data, the industry is required to output “between 22,000 and 24,000 lots per year in the Melbourne growth. “
- The national average cost of land was $746m².
(Derived from UDIA) State of the land 2018 Report – median Lot price for Melbourne
Please be advised these are median figures only, exclusive of design costs, planning costs, construction quotes and any construction variances, and timeline considerations. If you have any further enquiries about any part of this process, please contact us!
Building & Timeline Cost Considerations
In our experience the cost of build a dwelling influenced by the following factors, which I will likely delve into more detail in later articles.
- Size & Building Typology.
The scale of dwellings can vastly affect the overall costs of a project, as well as certain typologies.
For instance; An apartment complex will likely require much more consultant input, as well as fire rating requirements, acoustic and sustainability ratings etc when compared to a single dwelling on a lot where it is only intended for a singular tenanted/owner contract.
- Sitework & considerations
This is a major key factor that alludes most parties involved, and should always be considered upfront. The terrain and natural gradient of a site has a key role in the success of a project (whether it be due to budgeting, planning or even construction requirements) and can blow out the budget and timeframe if homework is not done on a site. Site costs are a very crucial consideration when deciding to build.
There is always costs to be considered when “prepping” a site for development.
- Is the site sloped?
- Would I need to cut and fill? How long will this take?
- Can we remove the existing landscaping?
- Is the land within an Area of Aboriginal Cultural Sensitivity?
- Is it on an overlay which may need to be considered?
- Will the slope of a site affect the design/ and vehicle mobility?
- Is council supportive of developing on a site like this?
Site costs are when most parties involved have the least control, and unless adequate research is done, the project can leave you with a project that is not profitable.
- Desired timeframe
More often than not the timeframe of a project can drastically affect the return or outcome of a project. There are two main places where the majority of time will be spent on.
- Council & Planning
As mentioned before, it is crucial to do as much homework as possible before submitting to the Council, as well as understanding what type of development you are proposing to which council. Councils respond drastically to different developments, and being misaligned with councils’ policies can cost you precious time and money. If you work closely with the Council to come to a unified resolve, it will also save you time!
The construction of a project will take up time and can potentially have unconsidered factors which extend the anticipated timeline.
- Quality of finishes & specifications
Quality of finishes usually makes or break a space. Unfortunately, it can also make or break the bank! It is vital to always consider the quality of finish in accordance with your budget.
Furthermore, it is also important to consider the location of the intended dwelling.
For instance, it is nonsensical to insert boundary to boundary social housing on a block in Toorak or to provide a three storey French provincial mansion in Norlane.
Having said that, quality finishes always are more desirable to the market/renters, so it is important to find the balance of what is within your budget against what the market requires.
- Variances & Change of mind
This is a very common situation we find ourselves in, where there may a client changing their mind or a design, product or finish and that can vastly extend the timeline of a project. A change of mind can trigger a resubmission or amendment which will have to be approved by the Council, which throws a spanner into the works.
- Unforeseen circumstances
The price of building generally does not include optional elements, such landscaping or additional elements and these should also be considered before a development.