Housing affordability and inflation

Whether you’re currently in the process of building a home, getting quotes for your proposed new home, or just reading and listening to the daily news cycle, you’re no doubt aware of the significant inflation associated with building a new home and the ever-increasing costs of living.

WEV has also had significant cost increases in the civil construction of Stages 4 and 5 with everything from copper to concrete rising in price over the past year. Unfortunately, much of these costs have had to be passed on, hence the increased cost of our Stage 4 lots, which were recently released.

Having said that, we’ve done our very best to keep our lots as affordable as possible. One of the most important things to remember is the huge amount of infrastructure and additional land associated with all of our lots, such as community gardens, batteries, microgrids, EV chargers, dams, conservation land, community centre, etc, which we believe still makes them great value.

In fact, the cost of developing the Ecovillage is way beyond your standard residential development, so much so that, unfortunately, I think it’s unlikely we’ll see any developers jumping to replicate what we’re doing in the near future. This will be a shame as we had always hoped that this project would be replicated by other developers once they saw how successful it was. I think this will most likely lead to us seeing significant land value increases within the Ecovillage once we’ve sold out of Stage 5, as I expect to see more demand than there are sellers at that point (please don’t take this as financial advice!). This was certainly the case for Village Homes in Davis, California, which is the closest example to what we’re doing.

We’ve also done our very best to ensure that we could still offer our Groupie lots at affordable rates. While the definition of “affordable” may be different for everyone, I think it’s fair to say that at $140,000 (including a Tesla Powerwall battery) our Groupie lots represent great value and are probably worth closer to $180,000 in the current market.

I was also very pleased to hear recently that builder Homes by Nature are currently building the WEV-designed ‘Pioneer’ (70sqm, 2 bed, 1 bath Groupie house) in hempcrete for $265,000. This is a beautiful, 9.4 star thermally efficient, solar passive home that’s connected to the grid but will ultimately be self-sufficient in renewable energy with double glazing, solar panels, rainwater tank, community garden and fencing, which can all be achieved on a Groupie lot of around 350m2 for $450,000. However, we appreciate that this is still unaffordable for many and unfortunately there are no social housing options available. Buyers need to financially qualify for our Groupie lots to ensure they are being purchased by the people who need them, or investors who can offer rental opportunities. 

The elephant in the room, so to speak, is the increased cost associated with building a new home. We’re grappling with this as best we can and are about to ask our builders to re-submit their best pricing on the six WEV ‘in-house’ designs that are available on our website. The prices were removed from these some months ago as the builders were struggling to keep up with material price inflation, which has been running at up to 2% per month. However, we hope to have these homes available again soon with fixed pricing which will be reviewed every six months.

One of the larger, most experienced builders in the Ecovillage recently told me that he expects to see prices retreating in around 12 months’ time. Hopefully he’s correct, and this will be most welcomed by all of us!

Having said this, many people looking at building now have managed to hold onto their existing homes or recently sold, and have generally experienced as much growth in the value of their existing properties over the past two years as the increase in the cost of building a new home.

I’m also very pleased to confirm that Econests by Arcologic and Tallwood Homes have developed a collaboration (architect and builder) to offer a great range of homes at what they expect to be a ‘third way’ path and price-point between project builders and bespoke architecturally designed homes. They’ve recently released these home designs on their website and prices will be available in June. Tate Constructions are also in the process of updating pricing on their beautifully designed Ecovillage homes, which will be available on our website again soon.

A screenshot from the Econests by Arcologic website www.econests.com.au. Credit: Econests by Arcologic

Another consideration to remember is the savings we’re all hoping to achieve through our Ecovillage infrastructure including community gardens, renewable energy, rain water, etc. If you’re growing most of your fresh food produce within our community gardens and using renewable energy to power your homes and vehicles, these savings will be significant on a weekly basis.

Unfortunately, this doesn’t help first home buyers who I expect may sadly disappear from the market until building costs reduce, wages increase or until government policy changes, all of which are sorely needed.

We will continue to do our best to drive highly sustainable housing and make it as affordable as possible for our future community.