Homebuyers sacrificing space to have own home and deal with rising building costs
Homebuyers are sacrificing space to own their own property and taking on more roommates or family members as the cost of building a new home has increased by almost 45 percent.
Experts say this trend contrasts with the Covid pandemic, when people opted for larger homes and fewer residents before costs skyrocketed.
New data shows that construction materials are now almost 40 percent more expensive than before the pandemic.
Tom Devitt (pictured), senior economist at the Housing Industry Association, said rising costs were leading to more areas flipping as people returned to living with family members or sharing housing.
While the data doesn’t show people opting for smaller housing to cope with rising costs, he said it would be consistent with the trend of having more people per household to cope with rising expenses.
“Cost-of-living pressures appear to be forcing people to sacrifice space in terms of the number of people per household,” he said.
“A lot of regeneration projects have also been put on hold, which was another thing that was booming, but now a lot of projects have been put on the back burner.”
Australian Bureau of Statistics data reveals building cost pressures are at their worst level in almost two years, according to the Master Builders Association (MBA).
The cost of building a new home rose 1.2 per cent in the September 2025 quarter, the biggest quarterly increase since December 2023, the MBA found.
MBA chief economist Shane Garrett said building a new home is now 44.8 percent more expensive than before the pandemic.
“The acceleration in new home construction costs is due in part to more expensive building materials,” he said.
“This is the fastest cost increase since late 2023, meaning home building material costs have increased a total of 37.9 percent since just before the pandemic.”
MBA chief executive Denita Wawn said the figures were further hindering Australia’s chances of meeting the Housing Agreement target of 1.2 million new homes within five years, with a 60,000 home building deficit in 2024-25.
“Each cost increase puts more projects out of reach and makes it harder to meet the Housing Deal target,” he said.
“There is no single tool to fix building cost inflation. Coordinated reforms in planning, skills, taxation and energy are needed.
“Permanent worker shortages continue to increase costs and delay projects, underscoring the urgent need for stronger training pipelines and employer support.”
