Houses don’t come cheap, but new analysis from Compare the Market finds that Australian cities are seeing higher percentage jumps in prices than anywhere else in the world.

The data found that the top four biggest Tender Price Index rises were in Australian cities, with the top three all coming from the same state: Queensland. A tender refers to the final detailed quote of a construction project, while the Tender Price Index or TPI measures the average construction cost in a particular city.

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.

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 per square metre, while the highest cost in Australia was Townsville at AU$3,066.67 per square metre.

The table below shows the top 10 cities with the biggest increase to their construction Tender Price Index, which reflects general construction costs, alongside the average residential build’s cost per square metre.

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.

Executive General Manager of General Insurance, Adrian Taylor, notes that the top three cities are all in the state of Queensland and have been recently affected by extreme weather. “It’s not too surprising seeing Queensland cities having the biggest increases to overall construction costs. Townsville has been hit with multiple flood events and storm events in the past year alone. This is no doubt going to exacerbate an industry that has already seen increasing prices in recent years,” Mr Taylor said.

“Not to mention, ex Tropical Cyclone Alfred hit South-east Queensland and a number of cities, including Brisbane and the Gold Coast. These storm events are just another influence on the pile of factors that are adding to construction costs.”

Another concern is that homeowners risk becoming underinsured as the costs of construction – and thus rebuilding their home if it was ruined in an insured event – continues to rise beyond what they’re covered for.

“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 by a small amount 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.

“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.”

To view the full table of data and to learn more, visit: https://www.comparethemarket.com.au/home-contents-insurance/features/building-costs-around-the-world/

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James McCay | +61 450 930 374 | [email protected]   

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