The Burrow
May 19, 2025
Houses don’t come cheap. Even years after the pandemic sent shockwaves through the industry, increasing pricing and causing massive delays to construction projects, the construction industry is still feeling the impacts.
Residential construction prices are rising, and this is just one of several factors leading to higher home and contents insurance prices. As insurance comparison experts, we have taken a look at the average residential construction cost in 2025 across 46 cities, as well as the change to the Tender Price Index since the same time last year.
Let’s get into the results.
A tender is a bid or application made by a construction company with the aim of receiving a construction contract. In a similar way to getting a quote from a tradesperson to carry out work in your home, it has details regarding the costs, timelines, materials and other information with an estimated overall cost.
If the tender is approved, the construction company can draft up more final, detailed contractual agreements with the project managers and begin the process of construction.
The Tender Price Index (TPI) shows the amount that tender costs have changed since a particular date, reflecting the impact to general construction prices in that area.
The ‘Lucky Country’ is looking a bit unlucky when it comes to construction cost rises. The data found that the top four biggest TPI rises were in Australian cities, with the top three all coming from the same state: Queensland!
The Gold Coast had the largest increase at 7.4%, followed by Brisbane at 7.1%, Townsville at 6.9% and Adelaide at 6.4%, which was the same as Toronto in Canada.
There were some cities which saw TPI drops from 2024 to 2025, all of which were in China. Guangzhou had the biggest drop at 5.2%, followed by Shenzhen with a 2.0% drop, then the capital Beijing down 1.8%.
As for actual dollar costs per square metre for residential construction, the highest costs were in the US. New York had the most expensive residential construction cost at AU$5,944.00, followed by San Francisco at AU$5,680.00 and Honolulu at AU$5,424.00 per square metre.
The cheapest residential construction costs per square metre were scattered across different parts of the world. Kuala Lumpur had the lowest at AU$396.54 per square metre. Ho Chi Minh City was the second lowest at AU$843.82, while Johannesburg was third at AU$880.88 per square metre.
The table below showcases the average construction cost per square metre for residential homes, in order of the annual change in the overall construction tender prices for each city.
| CITY | Average residential construction cost per M2 (AUD) | 2024-2025 Tender Price Index change |
| Gold Coast | $2,833.33 | 7.4% |
| Brisbane | $2,833.33 | 7.1% |
| Townsville | $3,066.67 | 6.9% |
| Adelaide | $2,086.67 | 6.4% |
| Toronto | $3,885.00 | 6.4% |
| Durban | $1,392.00 | 6.1% |
| Calgary | $3,701.85 | 5.9% |
| Seattle | $4,392.00 | 5.7% |
| Riyadh | $3,483.00 | 5.7% |
| Darwin | $2,416.67 | 5.5% |
| Sydney | $2,500.00 | 5.4% |
| Boston | $5,080.00 | 5.4% |
| Honolulu | $5,424.00 | 5.3% |
| Perth | $2,450.00 | 5.2% |
| Washington D.C. | $4,560.00 | 5.0% |
| Portland | $5,080.00 | 5.0% |
| Kuala Lumpur | $396.54 | 5.0% |
| Melbourne | $2,616.67 | 4.9% |
| New York | $5,944.00 | 4.9% |
| Las Vegas | $4,048.00 | 4.6% |
| Los Angeles | $3,872.00 | 4.5% |
| Phoenix | $3,360.00 | 4.3% |
| Paris | $2,595.00 | 4.1% |
| Budapest | $2,595.00 | 4.0% |
| Denver | $3,960.00 | 4.0% |
| San Francisco | $5,680.00 | 4.0% |
| Wellington | $4,307.33 | 3.9% |
| Chicago | $4,824.00 | 3.6% |
| Prague | $3,114.00 | 3.2% |
| Madrid | $3,633.00 | 3.0% |
| Dubai | $1,408.00 | 3.0% |
| London | $3,405.87 | 2.8% |
| Abu-Dhabi | $1,408.00 | 2.8% |
| Ho Chi Minh City | $843.82 | 2.6% |
| Berlin | $2,076.00 | 2.5% |
| Oslo | $3,633.00 | 2.5% |
| Chengdu | $1,162.33 | 1.0% |
| Cape Town | $1,131.00 | 0.9% |
| Johannesburg | $880.88 | 0.9% |
| Singapore | $4,026.17 | 0.7% |
| Auckland | $2,548.00 | 0.2% |
| Christchurch | $2,548.00 | 0.2% |
| Shanghai | $1,295.07 | -0.8% |
| Beijing | $1,254.00 | -1.8% |
| Shenzhen | $1,180.67 | -2.0% |
| Guangzhou | $1,092.67 | -5.2% |
N.B. The TPI reflects the change in general construction costs throughout the building industry. The average cost per M2 specifically reflects residential construction costs for houses, units and townhouses.
The changes to the cost of residential construction impact anyone looking to build a new home, but there is another group of people that can be affected as well. Existing homeowners run the risk of being underinsured if their home insurance coverage does not adequately cover the cost of rebuilding a home, should the need arise.
Executive General Manager of General Insurance, Adrian Taylor, explained the risk to homeowners.
“Should you lose your home from an insured event and need to rebuild, your insurer covers the cost of replacing your home buildings and contents up to the amount stated in the policy. If this isn’t sufficient to cover building costs, you’ll be left out-of-pocket for the remainder,” Mr Taylor said.
“Some insurers will increase your sum insured every year to help accommodate for changes in the construction industry, but it may not be enough, and you could face being left with the rest of the bill if you are underinsured.”
A mistake some people make when setting their sum insured is covering the cost of buying the house and including the land value.
“Your insurance just applies to the building itself, so you don’t need to insure your home for its value on the real estate market, just the construction costs for repairs or rebuilding,” Mr Taylor said.
“Also, if you’ve renovated your house, that could change the rebuild value too, for example if you’ve added an extension then you’ll need to include that in the sum insured amount as well.
“Make sure to read the Product Disclosure Statement (PDS) and Target Market Determination (TMD) for detailed information on coverage, exclusions and terms related to insuring your home and covering rebuilding expenses.”
The data in the table above was sourced from Rider Levett Bucknall’s Construction Cost Indicator tool and their TPI % Change tool. Construction costs were sourced from the ‘general residential’ and included single and double-storey houses, townhouses, and one to three-storey units. These costs were then averaged to create a city-specific average residential construction cost in dollars per square metre.
These costs were then converted from local currency into AU$ on 01/04/2025 and are subject to change.
The TPI % Change tool provides an average change to construction tender prices from January 2024 to January 2025 and are subject to change.
View a similar, previous article on building cost increases here.