Cost of building a home in Adelaide to increase by up to $40k, developments ‘unviable’, building industry warns

South Australians could be forced to fork out tens of thousands of dollars to meet energy standards designed for other states, industry leaders say.

The cost of building a home in Adelaide is expected to increase by an average of $40,000 to meet energy ratings, sparking concerns in the construction industry that some developments will be “unviable”.

Changes to the National Construction Code, approved by all housing ministers across the country last year, including SA minister Nick Champion, mandate the energy efficiency of new homes must be increased from a six star rating to seven.

The changes, which were set to be phased in by Sunday before being pushed back to October 1 next year, have seen the cost of building some homes across Adelaide increase by an average of $40,000.

Master Builders Association SA chief executive Will Frogley said the changes to the code would put developments across Adelaide “at risk”.

“South Australia is on track to be fully renewable by 2028 so why are we pricing homebuyers out of the market to adhere to a national code that was designed for states that burn coal?” he said.

Master Builders SA chief executive Will Frogley said some developments across Adelaide would be “unviable”. Picture: Matt Loxton

The cost of one new home in Adelaide’s north east increased by more than $85,000 and still did not meet the seven star rating, with other blocks in the same development increasing by an average of $40,000.

Mr Frogley said “an increase of that significance, of that size, will make that development “unviable”.

The $85,000 increase included extra roof, wall and under slab insulation and $25,000 worth of window glazing and only achieved a 6.3 star rating.

Housing Industry Association boss Stephen Knight said the increased cost would mean less houses would be built and force prospective homeowners to rent for longer.

“Some home designs are almost unviable now because of the cost that will be imposed by those changes,” Mr Knight said.

“It’s just making houses more and more unaffordable.

“The cost of construction has gone up by 25 to 30 per cent over the last few years and to add this on top is just too much to bear at this time.

“If what it means is people just can’t afford to get a house then you’ve got to question whether it’s a good idea or not.”

Housing Industry Association boss Stephen Knight said the changes to the National Construction Code would make houses “more and more unaffordable”. Picture: NCA NewsWire/Naomi Jellicoe

Builds in Mount Barker, the Adelaide Hills’ fastest growing town, are expected to increase by more than $40,000 due to the area’s fluctuating climate.

The head of a major Adelaide residential building company, who did not want to be named, said the cost of entry level homes in Mount Barker would increase by up to $50,000.

“It’s just ludicrous,” he said.

“The affordability side of it just goes right out the window.”

He said a lack of products, designed to meet energy ratings, such as windows, was also causing delays on new builds.

“It’s really, really messy at the moment,” he said.

Living Building Solutions director Josh Mollison, who works with several major residential builders across Adelaide to design environmentally sustainable homes, said the changes to code had “missed the mark”.

“With the supply chain of materials readily available on many urban infill blocks, it is near on impossible to achieve seven stars,” Mr Mollison said.

Mr Champion said the changes would “ensure the nation’s housing stock is greener and more energy efficient for future generations”.

He said the changes could be implemented into new builds for about $10,000 and would “deliver thousands in energy savings and provide cost of living relief for South Australians”.

However, Mr Mollison said the outlay for an average house would equate to about $100 worth of savings each year.

Originally published as Cost of building a home in Adelaide to increase by up to $40k, developments ‘unviable’, building industry warns