Not only have property prices increased significantly over the last 15 months, property investors who are looking to build their own homes either through a builder or using a volume home builder need to be aware that construction costs are also on the rise. Trade services are not cheap and depending on the level of finishings, these costs all add up when you take into account planning and council fees, project management fees, ancillary charges and don’t foget contingencies – there is bound to be some unforeseen expenses that need to be budgeted for.
Rawlinsons Construction Cost Guide is an excellent guide which provides extensive unit cost data for housing, small commercial and industrial buildings throughout Australia.
The obvious advantage of a new dwelling is the tax depreciation if it is going to be an investment property provided these depreciation charges suit the financial and tax circumstances of the individual investor. For example, there is little point in negative gearing a portfolio if you are only going to make tax losses at the end of the financial year.
Having an accurate account of construction costs will minimise the risk of cost overruns as this is usually the largest single cost category when building a new home. A good project manager and quantity surveyor will be able to provide accurate estimates in order to ensure the project is within budget and can be completed on time.
Some quantity surveyors provide construction cost calculator / estimator on their websites. These tools should only be used as a guide as they may not be able to take into account more detailed costings associated with a particular building project.
BMT Tax Depreciation, a firm of quantity surveyors have recently come up with estimates of construction cost per square metre for Sydney. This is a very useful guide for investors who are contemplating building their own home.