SA Government Partners with Industry to Reduce Apartment Construction Costs

Worsening housing affordability coupled with the high cost of construction has prompted the South Australian government to launch a new initiative aimed at developing cheaper, alternate construction techniques.

Developed by Renewal SA in partnership with the private sector, the Apartment Construction Cost Demonstration project is the first of its kind in South Australia, and will receive advice from representatives of the major industry bodies through an Industry Reference Group.

Renewal SA has allocated a 1,500 square metre site suitable for the construction of a four to five level apartment building comprising 16 to 20 dwellings at

The Square at Woodville West.

Preliminary analysis by Renewal SA indicates that a total project construction cost between $1,800 m² and $2,000m² (excluding consultants’ fees) needs to be achieved to ensure commercially viable apartment developments of between four and five levels.

The total project construction cost is defined as the combined cost of site works, at-grade car parking, building services, infrastructure, building cost, landscaping, builder’s margin and overheads.

This construction cost is based on anticipated retail selling prices for apartments in the high $200,000s to low $300,000s that have been established in Stage 1 of the Woodville West project.

Construction is expected to begin in the first half of 2015 if the target construction costs can be achieved.

Minister for Housing and Urban Development John Rau said this project aims to show how costs can be reduced for the homebuyer.

“Finding a solution to the current high construction cost of apartments will help bring down the purchase costs, meaning more South Australians will be able to afford houses in areas of their choice,” he said.

“The key to the success of this project will be innovation and collaboration between the builder, design team, Renewal SA and industry, who will need to explore elements including building and site layout, construction methodology and choice of materialsThe demonstration project has two main objectives:

• Deliver a commercially-replicable apartment building for public sale at market price points for inner/middle ring metropolitan locations. To do this, the project needs to achieve a target construction cost per square metre that results in a significant reduction in total project cost.
• Share the learnings with the construction and development industry of how such a reduction was achieved – particularly around techniques and practices for building layout, site layout, construction methodology and choice of materials.