Cost of Building a House in Sydney in 2022

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How much does it cost to build a house in Sydney in 2022? This might be a complex question since building costs are subject to constant change. Recent data has shown that Sydney is the most expensive city in Australia. Therefore, we should advise investigating the latest trends in the cost of building a house in Sydney before making a decision.

The cost involved in building a house in Sydney

What is the exact cost of building a house in Sydney? It’s hard to give any exact numbers, but there are some estimations. The first thing you’ll need to put on your paper in terms of cost is the cost of buying land.

The median cost of buying land in Sydney

According to the Urban Development Institute of Australia (UDIA), the median cost of buying a land lot in Sydney is defined at $477, 740 in 2021, while the stamp duty is estimated to be around $17,000. It’s easy to conclude that Sydney has the most expensive median price of land, while Adelaide, Perth and Canberra have much lower median lot prices. More information can be found in the UDIA’s State of the Land Report for 2021.

Estimated average building costs per square metre

In addition to the cost of buying land, there is also construction cost that is difficult to calculate. However, with some rough estimations, the construction cost per square meter is the highest in Sydney in comparison to other Australian cities, for custom-built houses (on average, around $1,930 per square meter, in the lower range). However, this estimated cost base excludes some necessary expenses like the costs of permits, design costs, architects’ costs, and similar costs tied to the design and building stage. Including all those costs in the construction cost base would only make those costs go higher.

Due to that, the cost of building an architecturally designed house can be much higher and is estimated to go up to $3,000 per square metre.

The average cost of buying a house in Sydney

The median house values in Sydney are around $1,360,543, according to CoreLogic’s data collected in December 2021.
Sydney is still the most expensive city for buying a house, while much cheaper options are available in Adelaide and Perth.

Is it cheaper to build or buy a house in Sydney?

Since the average house size in Sydney is 235 square meters for newly built homes, according to the latest statistics, it’s easy to calculate the average cost of building a house.

For architecturally designed homes, the construction cost of building a new house would be 3,000 x 235 = $700,000. When adding the median cost of buying a land lot in Sydney ($477, 740 plus stamp duty), the estimated total cost of building a house can be around $1,200,000.

On the other hand, we already mentioned the latest data regarding the median house values in the Sydney market, which are around $1,360,543.

In conclusion to that, if we take this data at face value, we see it’s cheaper to build a house than to buy it in Sydney.

Available government grants for first home buyers

There are some state programs such as the First Home Buyers Assistance Scheme allows the full exemption of stamp duty if a buyer is buying the house for the first time (the value of the house is capped at $650,000). However, if a first home buyer buys a house whose value is capped at $800,000, he can qualify for a concession of stamp duty.

Also, there is a $10,000 First Home Owner Grant available for first home builders or buyers. To qualify, one must purchase vacant land and sign the contract with the builder, making sure that the total building cost mustn’t exceed $750,000.

Factors that affect the cost of building a new house

In general, there are a few main factors that heavily influence the cost of building a house:

  • Size –  a larger house will require more material, labour, and bigger deadlines, so it’s reasonable to expect the cost to go up,
  • Design complexity – complex structures and design plans will require more resources, high-quality materials, and unique details that add to the total cost,
  • Building quality – high-quality materials increase the cost per se, but also require better craftsmanship that will also increase the total building costs,
  • Time frame – shorter deadline will require hiring more experienced project managers in construction, where technical and coordination skills matter,
  • Site condition and accessibility – the inaccessible sites will require special machinery, and experienced staff to manage.

How Covid-19 has impacted construction costs?

The pandemic has been an unprecedented event that has impacted the construction industry and the building cost in many ways. Border closures, restrictions, and legislative changes heavily impacted the international supply chains, the cost of construction has risen, and deadlines are not being met due to delays.

The cost mainly increased due to the shortage of labour and material, which make a significant percentage of the total construction cost. It’s estimated that the trends are likely going to go in the same direction in the near future, too. For example, the cost of timber and steel products is up to 40% higher than in a pre-covid time.

How long does it take to build a house in 2022?

Since the building costs are impacted by the recent crisis, the timelines of the projects will be affected too. Some research has shown that in some cases, the timeline can double, or triple. These industry trends are unfavourable to both developers and homeowners, putting too much stress and uncertainty. Before Covid-19 hit, the projects that were to be completed between 6 and 8 months are now prolonged to 12 or even 18 months. Also, sometimes a compromise is a good solution, since in times like this, construction costs can skyrocket, and the timeline can extend 2-3 times. In that case, an option would be to downsize and pick the simpler design.

How we can help you with our expert advice

Do you need assistance with calculating the cost of building a house in Sydney, NSW? We’re building consultants based in Sydney with more than 20 years of relevant industry experience. We’ve helped other companies and individuals with our expert financial reports and analysis of construction project budgets and processes. Book your consultation today at (02) 9522 6407 or

Frequently Asked Questions

Will property prices fall in Sydney 2023?

Australian house prices are falling at a record level, marking a huge decline of 8.4% calculated between May 2022 and January 2023. We expect further falls in the Australian home prices in the following months.

Is it better to buy or build a house?

Given our example below, we can see it’s cheaper to build a house than to buy one in Sydney. However, it’s hard to provide a definite answer, as construction costs are continuously changing, which can impact the total cost of building a house.

Will construction costs go down in 2023 Australia?

According to the leading industry experts, the construction costs will continue to rise in 2023. However, the costs will rise at a lower level than what was the case during the previous fiscal year, where, on average, the construction cost rose to 20 percent.

Angelo Antidormi
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