How Much Does It Cost to Build a House Today?

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Building a house today in Australia is a huge financial commitment. But exactly how much should you expect to pay? While it depends on many factors – such as where you’re building, the design, and the materials you choose – the total cost to build a project home typically falls between $1,500 and $3,000 per square metre.

However, if you’re planning a custom or luxury build, the cost could exceed $6,000 per square metre. Overall, the total cost can range anywhere from $300,000 to $900,000 and sometimes exceed $1 million, depending on what you’re after.

If you’re a first-time homebuyer looking for a clearer picture of the costs involved, this guide will walk you through everything you need – from the initial planning stages to the final price tag.

Key Factors Affecting Home Building Costs

The cost of building a home varies greatly because many factors affect the price. Let’s break down the key variables that can impact your budget so you can plan ahead.

Location

Where you choose to build dramatically determines how much you’ll spend. The land is one of the biggest costs, and prices vary dramatically depending on location. Land can be costly in cities like Sydney and Melbourne, where demand and space are limited. For example, the average block of land in Sydney costs $716,381. If you buy in Perth, that money could get you three blocks of land instead of one. Regional areas are even cheaper – depending on the state, you could buy land for as little as $100,000.

Building costs are also higher in big cities. This is because labour and materials are in high demand, pushing prices. In places like Sydney, builder and contractor fees can easily add an extra $100,000 to your total.

In addition to land costs, you’ll need to budget for site preparation and any extra work needed to prepare the land for building. This can vary depending on your location. For instance, sloping blocks or land in flood-prone areas may require extra engineering, excavation, or drainage solutions, which can quickly blow out your budget. 

Pro Tip: If you’re looking for a Sydney mortgage broker, Melbourne mortgage broker or Brisbane mortgage broker to help with financing, comparing rates before buying land is a fantastic idea.

Size and Design

The size and design of your dream home can significantly impact your building costs. The larger the house, the more materials and labour you’ll need. If you want a sprawling 6-bedroom mansion, it’ll cost much more than a 2-bedroom townhouse. Remember that larger homes also take longer to build, meaning you’ll pay more for labour for the completed project.

Another thing to note is that custom homes – such as those designed by an architect – tend to be more expensive than project homes built by a volume builder. Project homes are pre-designed and standardised, making them quicker and more cost-effective. However, they offer limited flexibility. On the other hand, custom homes allow you to tailor the property to your preferences, but this comes at a higher price.

You might pay between $1,500 and $3,000 per square metre for a project home, but custom homes with high-end materials and complex designs range from a minimum of $3,000 per square metre and up to $6,000 per square metre or more.

Building Materials and Finishes

When it comes to building materials and finishes, the choices you make can have a huge impact on your overall costs. Premium materials like stone benchtops, hardwood floors, and custom cabinetry can dramatically increase costs, while more budget-friendly options like laminate or engineered wood are more affordable. Even decisions on roofing materials, window types, and insulation will add to your overall cost and price, especially if you opt for higher-end alternatives.

The finishes you choose, such as paint, wallpaper and tiles, also add up quickly. High-end finishes or custom features come with a higher price tag, while standard finishes are more cost-effective. Depending on how fussy you are, these selections can add tens of thousands to your final build cost.

Understanding the Full Cost of Building a Home

When building a home, it’s easy to focus on the price of materials and labour – but several other key expenses make up the total cost. Knowing what to expect can help you plan more effectively and avoid nasty surprises you haven’t factored into your budget. Let’s break down the major costs of building a home today in Australia.

Land Purchase and Site Preparation

As we touched on a few seconds earlier, land cost is one of, if not the largest, costs when building a home. But it’s not just the purchase price you have to consider. If the land isn’t perfectly flat, you must account for site preparation, including clearing, excavation, and any necessary adjustments like levelling or adding retaining walls. Site costs can range from $12,000 for a flat block of land to $25,000 for a hilly one.

Design and Planning Fees

Before construction even begins, there are upfront costs you’ll need to think about. If you’re building a custom home, you’ll need to work closely with an architect. Their fees usually range from 5% to 15% of the total project cost, depending on their level of involvement and the difficulty of the project. This could mean between $25,000 and $75,000 for a $500,000 build. Design services are often included in the package for project homes, making this more cost-effective if you’re on a budget. On top of architectural fees, you’ll also need to pay for planning permits (for zoning and development approval), which will set you back between $2,000 and $10,000.

Construction Costs

Construction costs can be split into several stages, affecting your overall budget.

Foundation and Framing: The foundation is crucial for stability, and the cost will change depending on the type (slab, stumps, or piers). A concrete slab, for instance, will cost you between $75 to $110 per square metre. A stump foundation usually costs more due to its complexity. After the foundation comes the framing, which forms the skeleton of your home. A timber frame will generally cost between $1,200 and $1,680 per square metre, depending on the size and materials used.

Interior and Exterior Finishes: These costs vary widely depending on your preferences. Standard finishes, like bare flooring, tiles, and cabinetry, will keep costs lower. However, if you opt for high-end finishes like hardwood floors, custom cabinetry, and stone benchtops, you can add $50,000 to $100,000 to your build. Depending on the home’s materials and design, exterior finishes like roofing, cladding, and paint can add another $30,000 to $100,000.

Utilities and Services: Connecting your home to essential utilities (water, electricity, sewerage, and gas) is another crucial expense. In some cases, especially in more remote areas, you may need to install water tanks or septic systems, which can add thousands of dollars to your budget. Depending on location, utility connections typically range from $6,500 to $30,000.

Labour and Contractor Fees

Labour is one of the most significant costs when building a home and will equate to 30-40% of your budget. However, labour is also one of the most variable costs in a home build because it changes so much depending on your location and the project’s complexity. Builders and contractors in high-demand cities like Sydney and Melbourne charge more than those in regional areas. Builders working in rural areas might charge less overall, but additional costs could arise if tradespeople need to travel long distances to your site.

Additional Features and Landscaping

The finishing touches to your home, such as landscaping, driveways, and fencing, are often left out of the initial budget. However, these elements can quickly add up. Landscaping alone can range from $5,000 to $50,000, depending on how elaborate you want your garden or outdoor area to be. You could double that amount if you plan to install premium features like a swimming pool or alfresco area.

Permits, Inspections, and Compliance

During the building process, you must obtain permits and schedule inspections to ensure your home meets all safety and building standards. This includes checks on structural integrity, electrical, plumbing, and fire safety compliance. The cost for these can range from $5,000 to $20,000.

Conveyancing

Conveyancing fees are another hidden cost in the home build process. Conveyancers or solicitors handle the legal aspects of purchasing the land and managing contracts with builders. These fees typically range from $1,500 to $3,000, depending on the complexity of the contracts and the state or territory you’re in. A conveyancer is essential to tick all the legal requirements and keep your contracts airtight – so it’s not something you should overlook or try to cut corners with. If you need a reliable and experienced conveyancer, check out our shortlists in Sydney, Brisbane and Melbourne.

Insurance

When planning your new build-out, ensure you account for builder’s insurance, also known as home warranty insurance. This insurance protects your investment during construction and covers significant structural damage or unforeseen problems. Even more importantly, it provides financial protection if your builder goes bankrupt or disappears before completing the project – something that’s become frighteningly common in recent years. The cost of builder’s insurance typically ranges from $1,500 to $4,500, although that amount has been predicted to increase shortly.

Summary of Building Costs

Item	Cost
Land Purchase	$100,000 – $700,000+
Labour and Contractor Fees	$100,000 – $300,000
Construction (Foundation, Framing, Finishes)	$150,000 – $500,000
Design and Planning Fees	$15,000 – $75,000
Site Preparation	$12,000 – $25,000
Permits and Inspections	$5,000 – $20,000
Builder’s Insurance	$1,500 – $4,500
Conveyancing Fees	$1,500 – $3,000
Landscaping and Outdoor Features	$5,000 – $50,000
Utilities and Services	$6,500 – $30,000
Total Estimated Cost	$300,000 – $1,000,000+

Labour Shortages and Rising Construction Costs in Australia

In recent years, Australia’s construction and building industry has been hit hard by labour shortages, driving up the cost of building homes. Between the COVID-19  pandemic, a shortage of skilled tradespeople, and high demand for housing, keeping construction costs under control has become a massive challenge.

The lack of skilled workers is common in major cities like Sydney and Melbourne, where builders, electricians, and plumbers are often booked months in advance.  Regional areas are also feeling the pinch. Builders must travel long distances from where they live, increasing the costs even further.

In recent years, building materials prices have skyrocketed due to labour shortages. Timber, steel, and concrete have become harder to obtain and more expensive. Global supply chain issues, inflation, and increased demand are largely to blame. These rising material costs, combined with longer construction times, mean that building a home takes more time and money than just a few years ago. For many Aussies, this has led to unexpected budget blowouts and delays in moving into their new homes.

Tips to Save on Building Costs

Building a home can be expensive, especially given the recent price rises. But there are plenty of ways to keep costs down without compromising quality. Here are some practical tips to help you save:

• Opt for a Simple Design: The more complex the design, the more expensive it gets. Stick to a straightforward layout with fewer corners, walls, and levels to reduce construction and labour costs.
• Choose Standard Materials: Instead of premium materials, consider using more affordable options like laminate flooring or vinyl countertops. These can give a similar look without the high price tag.
• Limit Custom Features: Custom cabinetry, built-ins, and luxury finishes can drive up costs. Opting for more straightforward, off-the-shelf options can help you stay on budget.
• Get Multiple Quotes: Always get several quotes from different builders, and don’t be afraid to negotiate. Builders often have room to adjust their prices, especially if they know you’re comparing offers.
• Buy Materials in Bulk: If you’re responsible for sourcing materials, buying in bulk can help you secure better deals. Plan ahead and maximise sales or discounts for items like tiles and paint.
• Consider a Project Home: Volume builders often offer package deals with standard finishes, usually cheaper than custom homes. While custom homes offer flexibility, project homes can be built more quickly and affordably.
• DIY Landscaping: Professional landscaping can be expensive. If you’ve got a green thumb and are willing to get your hands dirty, you can save thousands by doing the garden, lawn, and outdoor projects yourself.
• Build an Energy-Efficient Home: Incorporating energy-efficient appliances, insulation, and solar panels may have a higher upfront cost – but it can save you money on energy bills in the long run. Some states even offer rebates for energy-efficient upgrades.
• Apply for Government Grants and Incentives: Take advantage of government programs like the First Home Owner Grant (FHOG), which can provide up to $10,000 or more to eligible first-time buyers. This grant can significantly offset your upfront costs, especially with other concessions. For instance, some states offer stamp duty exemptions for first-home buyers, which could save you thousands of dollars right from the start.

Budgeting Tips for Building a Home

Building a home is probably the most expensive project you’ll tackle in your lifetime. Having a clear budget will help you avoid any nasty surprises. Here are some simple tips to help you stay on track:

• Be Realistic: Start by setting a realistic budget that includes everything – from buying the land and construction to permits, fees, and finishing touches. Adding a buffer of 10-20% is wise to cover any unexpected costs or price jumps.
• Keep Track of Your Spending: Regularly check your spending throughout the building process. You can use budgeting apps or even just a simple spreadsheet to keep an eye on payments and upcoming expenses. This helps you stay on top of things and catch any overspending early.
• Prioritise Needs Over Wants: Getting carried away with high-end finishes or custom features is easy, but sticking to your budget means making some tough decisions. Before adding extras, focus on what’s most important, like the home’s structure and energy-efficient options.
• Get a Fixed-Price Contract: Try to get a fixed-price contract with your builder whenever possible. This way, you won’t have to worry about rising prices due to material shortages or higher labour costs. A fixed price gives you peace of mind and helps you stick to your budget.
• Secure Financing Early: Make sure your Financing is sorted early on – whether a construction loan or getting pre-approval for a home loan. Having this locked in ahead of time will help prevent any delays once the building starts.
• Plan for Future Costs: Don’t forget the costs don’t stop when the house is built. You must budget for property taxes, insurance, utility bills, and long-term maintenance and repairs. Planning for these in advance will save you a headache later.

Conclusion

Building a home in Australia can be a complex and expensive process. Understanding the key factors influencing costs – from land prices and design choices to materials and labour – will help you plan more effectively. With rising construction costs and ongoing labour shortages, creating a clear, realistic budget that considers everything is more important than ever.

Whether you’re opting for a project home or going all-in on a custom build, it’s crucial to prioritise your spending and look for ways to save without compromising on quality. Remember, building a home isn’t just about the initial costs – it’s also about making smart, long-term investments that add value over time.

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Frequently Asked Questions

How much does it cost to build a house today in Australia?

Building costs in Australia range from $1,500 to $3,000 per square metre for a standard project home, with custom or luxury homes costing up to $6,000 or more per square metre. The total cost for a home typically falls between $300,000 and $900,000 but can exceed $1 million depending on location, design, and materials.

What is the most expensive part of building a house?

Land purchase is often the most significant cost, especially in cities like Sydney and Melbourne. Labour and materials also add up fast, especially if you’re building a custom home with many high-quality, top-end features.

What factors affect the cost of building a home?

Key factors include the land’s location and price, the home’s size and design, the choice of final cost of building materials, labour rates, site preparation needs, and compliance with local council requirements.

How long does it take to build a house?

Typically, building a house takes around 6 to 12 months. However, custom homes can take longer because they tend to be more complex, while some project homes houses can be built in less time. Delays can also happen if there are labour shortages or issues getting materials.

How can I save money when building a house?

You can cut costs by choosing a simpler design, using more affordable materials, choosing a project home, and getting quotes from multiple builders. Negotiating contracts, doing some of the landscaping yourself, and looking into government grants like the First Home Owner Grant (FHOG) can also help.

What are the typical labour costs in home construction?

Labour makes up about 30-40% of your overall budget. For a standard home, labour costs can range from $100,000 to $300,000, though more intricate or custom home builds can push this higher.

Are there government grants available for home building in Australia?

Yes, the First Home Owner Grant (FHOG) offers up to $10,000 in many states and stamp duty exemptions. You might also find extra incentives for building energy-efficient homes, like rebates for installing solar panels.

What additional costs should I consider when building a home?

In addition to construction and materials, you’ll need to budget for permits, site preparation, utility connections, conveyancing fees, builder’s insurance, and landscaping. These extras can add $30,000 to $100,000 or more to your total.

What is the difference between a project home and a custom home?

Project homes are pre-designed and more affordable, making them quicker to build. However, they don’t offer much flexibility in design. On the other hand, custom homes allow you to design every detail of a new home from the ground up, but this comes with higher costs and longer build times due to the project’s unique nature.

Should I hire a custom builder or go with a volume builder?

If you’re looking to save money and build more quickly, a volume builder who offers pre-designed homes might be the way to go. But if you want complete design flexibility and don’t mind paying more or waiting longer, a custom builder will give you complete control over the details. It really depends on your budget and how much customisation you want.