The average cost of building a house in Victoria has risen more than $100,000 since February 2021. Barry Simon is planning to become an industry consultant rather than continue to grapple with the costs. Picture: Alex Coppel.

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Victoria‘s average home build cost has surged more than $103,000 to just under $440,000 in just 15 months.

The huge rise means the state’s housing economy is leading the nation in terms of new homes being approved for construction and the rate at which the cost to build those homes is rising.

In 2021 an unprecedented 47,351 new houses worth a combined $17.02bn were approved across the state, according to Australian Bureau of Statistics figures.

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By May this year another 14,613 builds covering $6.143bn had been given the green light.

Housing Industry Association and News Corp Australia analysis of the ABS figures shows they’re also much more expensive, with a $32,000 jump in typical construction costs from March to April the biggest in Australian history.

HIA chief economist Tim Reardon said this likely marked a line in the sand where builders pulled back from aggressively quoting for business as they tried to anticipate future material cost rises, but added it would also reflect the type of homes being built and their locations.

Victoria’s average home build cost from 1970 to today. Data compiled from ABS figures.

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The data also shows the state’s building boom peak occurred in March, 2021, when an unprecedented 5066 new houses were approved — with a $345,962 average cost.

HiScope Builders owner and builder Barry Simon started his career as a builder in 1972, but said with material and labour costs so unpredictable he was planning to pull back and consult rather than continue fighting to find materials and staff.

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Mr Simon has focused on renovations and extensions, but said his side of the industry had been hit just as hard as the new home sector by cost increases that have “reached everything and everyone”.

A recent client who appointed Mr Simon for an extension at $190,000 informed him the same job was quoted at $120,000 about two years ago, and he recently watched the price of bricks rise 10 cents from when he priced a job to when he ordered the material.

HiScope Builders owner Barry Simon is planning to pull back on building work due to the surging costs after 50 years in the industry. Picture: Alex Coppel.

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“I do estimates now, I don’t call them quotes any more,” he said.

The builder and carpenter is also seeking agreements with customers around unexpected material cost increases before agreeing to take on their jobs, and said builders who were not able to do that would continue to go broke — particularly “young bucks” just starting out.

Separate figures from the Australian Securities and Investments Commission show 180 construction firms had gone into external administration by the end of May in 2022, including 51 in the final month of data.

It brings the total for the past 12 months to 399, which remains below the 433 average across the past eight years.

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