Why the cost of a new house can vary so much from state to state, study finds

Posted August 07, 2018 07:07:18 A study has found the cost to build a new home varies wildly depending on where you live.

Key points:A new house is more expensive in New South Wales than in VictoriaA new property can cost as much as $400,000 in VictoriaBut, the study suggests, the cost varies depending on the stateA study by a Melbourne-based business think tank has found there is no single common formula for calculating a new property’s cost.

Key point:New South Wales has the highest number of new houses built per capita, followed by Victoria and Western AustraliaThe study, by the Melbourne Institute of Applied Economics (MIAE), found that a $100,000 purchase in the state of Victoria was more expensive than a $200,000 property in Queensland.

Key Points:New homes are more expensive per capita in NSW than in most other statesThe study found a $400 “buy-to-let” house in NSW was more costly than a two-bedroom property in the ACT.

“It’s hard to pinpoint exactly where this is because it’s such a wide spread,” study author David McLeod said.

“We’ve looked at all the different aspects of a property and how it might be built, and that can be a pretty good indicator of what it might cost.”

The question is, does that mean we should go back and look at all our previous housing decisions and say, ‘well, we should be doing this now?’

“A new home in NSW costs $300,000 a year more in Victoria than it does in the other states, and $800 per year more than in Western Australia.

Mr McLeod noted the study did not factor in how long it would take to build the new house, or how much it would cost to replace the existing one.”

There’s a lot of uncertainty around this stuff, and I don’t think it’s going to be resolved anytime soon,” he said.

He said it would be a good idea for local governments to look at the cost they could make up for the loss of new housing.”

In New South-Western Australia, for instance, we are really close to having an election,” he told ABC Radio Melbourne.”

I think it would make sense for them to look back at their previous housing investments and make sure they could justify the loss in future.


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