New House Build Costs Rising Faster Than Inflation

The cost of building a new house is rising faster than inflation across most of Australia, research has revealed.

According to ABS data analysed by OpenLot.com.au, Tasmania recorded the sharpest increase, with average construction costs up 9.2 per cent in the past financial year.

South Australia followed with an 8.2 per cent rise, while Western Australia and the Northern Territory posted increases of 7.2 per cent and 5.5 per cent respectively.

Only the ACT reported a decline, with average costs slipping 0.5 per cent.

The research compared average detached house construction costs in the 2024 and 2025 financial years using the most recent full-year building approvals data from the ABS.

OpenLot chief executive Qi Chen said building a new home was becoming more expensive “nearly everywhere”.

Chen said many buyers in new estates were adjusting their expectations by opting for smaller homes or cheaper finishes to absorb the rise.

Victoria at $589,080 a house and New South Wales at $558,326 were the most expensive states in which to build.

Cost to build a new house by state, territory

▲ Source: OpenLot.com.au; ABS

However, Chen said project scale in those markets had helped absorb cost pressures.

He said higher transport and logistics costs were a significant factor in Tasmania and the NT.

The data reflected construction costs only and did not indicate whether builder margins were tightening, as that depended on individual contracts, Chen said.

“Persistent construction inflation requires co-ordinated action from builders, suppliers and policymakers to improve building practices and approval processes,” he said.

“Greater transparency in the new-home market could also help buyers better understand costs and options.”

The data did not include apartments and other multi-unit homes and captured only the cost to build, not land or final sale prices.

The figures are based on the latest full-year building approvals data from the ABS.