Whether you’re building a two-bedroom kit home or a five-bedroom family home, here’s everything you need to know about the cost of building a house in Australia.
Building a new house is a daunting experience. Combining all the features and fittings you want into the perfect home, and doing it all on a budget, can be far from easy.
Regardless of whether you’re building your own home or an investment property, the key factor underpinning all your decisions is cost. You want your new home to be as affordable as possible, and you don’t want to get ripped off by any unscrupulous builders or tradies who think they can get away with overcharging.
So how much does it cost to build a house in Australia? That depends on a wide range of factors.
How much does it cost to build a house per square metre?
This is difficult to answer because there are scores of factors that affect how much it costs to build a house. Site costs, such as sloping land, as well as the specifics of your home, such as materials used, quality of inclusions, design and layout, make it impossible to quote a one-size-fits-all figure.
“Very few Australian builders are willing to quote based on per square metre,” explains Nick Khachatryan, founder and managing director of Real Estate Exclusive and Jardine Nicholas Homes. “I would strictly forbid consumers making decisions based on price per square metre; it’s the quality of inclusions that matters.”
Having said that, the average figure quoted for the cost of constructing a house is usually around $1,500 per square metre. This includes a range of assumptions, such as a custom-built home on an excellent site and using a basic level of finishes. Choosing a project-built house would see this figure drop, perhaps to $1,000 per square metre or even lower, while it could also increase substantially if you up the level of finishes, have a difficult building site or add extra features such as a deck.
The scope for variation in square-metre building costs is huge. However, there is plenty of data available to help you form a rough idea of the costs per square metre when building a house. The table below is taken from Rider Levett Bucknall’s Riders Digest 2016 Melbourne, Australia Edition. It shows the range of per-square-metre building costs for custom-built residential homes across Australia’s major capital cities.
Australian Construction Building Costs (fourth quarter 2015) - Custom-built, single- and double-storey dwellings
Cost range per floor area ($/m2) - Low
Cost range per floor area ($/m2) - High
Sydney
1,550
4.350
Melbourne
1,365
2,700
Adelaide
1,550
3,400
Brisbane
1,700
3,400
Canberra
1,530
2,507
Darwin
1,750
2,750
Perth
1,420
2,263
*Data taken from Rider Levett Bucknall Riders Digest 2016 Melbourne, Australia Edition
Average cost to build a three-bedroom house in Australia
If you’re looking to build a three-bedroom house, Khachatryan says prices can start from around $160,000 and head upwards from there. Of course, this depends on the standard of finish you choose for your home, as well as the inclusions you want and any other requirements specific to your build.
Budget
Cost: From $160,000 on average
“To keep it a budget build, the customer can choose not to include stone benchtops, small 600mm appliances, gardening, fencing, security, blinds, reverse cycle air-conditioning, flyscreens, driveway, alfresco area, etc.,” he says.
Standard
Cost: From $180,000 on average
“Key features of a standard build are inclusions of basic items such as fencing and driveway, and possibly an alfresco area and possibly air conditioning,” Khachatryan says.
Premium
Cost: From $195,000 on average
“Key factors in premium builds are a bigger floor plan, 2,740mm-high ceilings throughout, stone benchtops in kitchens and all bathrooms, 900mm appliances, gardening, fencing, security, blinds, reverse air conditioning, flyscreens, driveway, alfresco area, triple sliding or split doors to alfresco area, more pantry space, movie theatre room, study, mirrored sliding wardrobe doors, etc.,” Khachatryan says.
Average cost to build a four-bedroom house in Australia
If you need to build a four-bedroom home, prices start to increase. Not only do four-bedroom homes cover more floor space, but they also often require the addition of a second bathroom.
Budget
Cost: From $185,000 on average
“A budget build can start from $185,000 on average without full inclusions – add $17,000 for full inclusions such as above,” Khachatryan says.
Standard
Cost: From $195,000 on average
“Can start from $195,000 on average without full inclusions – add $18,000 for full inclusions such as above.”
Premium
Cost: From $205,000 on average
“A premium build can start from $205,000 on average without full inclusions – add $21,000 for full inclusions such as above,” Khachatryan says.
Average cost to build a five-bedroom house in Australia
Are you planning to build a five-bedroom home for your family? The good news is that it doesn’t necessarily have to cost a whole lot more than a four-bedroom house.
“Normally some four-bedroom homes come with a movie theatre room, which can cost-effectively be turned into the fifth bedroom with an additional $2,500 by adding a hinged door and a wardrobe,” Khachatryan explains.
Building cost calculators
There are a number of building cost calculators available online to help you work out your costs. While these calculators are useful if you want a very rough idea of how much money to set aside for your new-home budget, they’re a long way removed from an accurate quote. Before you use them, make sure you’re aware of any assumptions each calculator makes, and take whatever per-square-metre result you are given with a grain of salt.
For a much clearer idea of how much it will cost to build your house, you’ll need to have detailed design and construction plans drawn up and get quotes from several builders. These will take into account all the specifics of your project, from any site requirements through to the size, layout and features of the build.
Just make sure you know exactly what is included in the quote from your builder and what may cost extra. For example, site costs, carpets, driveways, landscaping and fencing are often not included in quotes but can add thousands of dollars to the overall cost.
What factors affect the cost of building a house?
There is a huge range of factors that affect building costs.
Land. “Land is the first prime factor in the overall cost of the home with respect to the budget and, in the majority of cases, will determine the budget for the house build,” says Drewe McCredie, general manager of Brisbane-based construction and development company kalka. The nature of the block – is it flat or sloping, for example – will also affect the total cost. Nick Khachatryan warns that there may be hidden site costs for your block of land, the most expensive of which is usually sloping land over 500mm. “In some extreme cases, site costs can exceed $20,000, where large boulders found under the land need to be cleared prior to building,” he says.
Location. “Each state has its own varied rates for taxes, insurances, and certification processes and fees. Building outside of a metropolitan area will also affect the cost for out-of-area allowances for additional travel,” McCredie says.
Regulations. Stringent regulations apply to the construction industry and Workplace Health & Safety is consistently reviewing and updating what systems need to be complied with. McCredie says that “Fall from Heights” is one of the more specific control measures which inevitably results in higher building costs.
Covenants. There are some instances where estates have covenants which require specific building materials to be used or design requirements to be met. These costs will vary depending on the individual requirements.
One storey or two. McCredie says that it will generally cost more to build a two-storey home than a one-storey home as there are additional items required to build a second-storey home, including an additional floor system, stairs, scaffold, fall protection equipment etc. that are not always required for a single-storey house build. Nick Khachatryan says that double-storey, four-bedroom homes can start from $290,000, versus an average single-storey, four-bedroom home starting from $190,000. There’s an average difference of $80,000–$100,000 between one-storey and two-storey houses, but these price ranges will typically not include all turnkey inclusions.
Materials used. From brick and brick veneer to a lightweight clad such as weatherboard, the materials used in the construction of your home will have a big impact on the total cost. “The approximate costs of a brick veneer vs a fibre cement sheet clad are going to be about on par,” McCredie explains. “The different range of bricks and also type of mortar colour will increase the cost of the brick component, and some bricks are approximately three times the cost of your entry-level brick. Lightweight cladding is also in a similar comparison. The wide variety of lightweight-clad materials gives plenty of options to create a great looking facade; however, as with bricks, some claddings can be approximately three times as much as entry-level materials.”
Trades. Trades also play a part in the cost of your build. “Brick trades typically have different rates for upper or lower bricks, and also single- and double-height bricks. Lightweight-clad trades generally have a single rate for each cladding type,” McCredie explains. Then there are the other trades you need to get your house to move-in status: plumbers, electricians, tilers, painters, plasterers, renderers and even landscape gardeners.
Your house. How many square metres will your home cover? How many bedrooms and bathrooms will it have? Will it be architecturally designed or a project home? To what standard will it be fitted out and finished – budget, standard or premium? All of these factors can make a difference of tens or even hundreds of thousands of dollars in the cost to build your home.
Choosing a builder
The builder you choose to complete your construction project is the next factor that can have an impact on the overall price. Builders can vary not only in the type of work they specialise in (for example, custom-built homes vs display homes), but also in how much they charge for their work. It’s essential to obtain quotes from several builders to get an accurate idea of building costs, as well as which builder offers the best value for money.
Here are some important questions you should ask any prospective builder before enlisting their services:
Are you properly licensed?
Do you have insurance?
What is your building process and why is it like that?
Can you design and build a house to suit my block of land?
Do you provide regular updates on the progress of the build?
Are the plans and design flexible?
Are there any completed homes you have built that I am able to inspect?
Do you have any references?
Nick Khachatryan says that the majority of home builders simply pursue the cheapest quotes, which often ends in disappointment. “The best way is to look at the builder’s price compared to others’ prices and the inclusions list from the core of the house to the ceiling,” he says. “Keep a lookout for site costs as they can vary from builder to builder; however, do not pursue the cheapest site cost quote – very often you will be asked to pay the difference in the future.”
As part of the quotation process, Khachatryan recommends asking the builder to provide an inclusions list along with a turnkey inclusions list for which they charge extra. Enquiring about the number of builds the builder conducts each year is also a good idea.
“Most certainly ensure that the floor plans provided by the builder for your selection match your lifestyle. Pay close attention to floor plan size and what is included in the floor plan total size as external living areas are also included,” he says.
Check that any builder you consider is properly registered, licensed and insured. Khachatryan says he also highly regards builders with display homes. “Ask if the builder has a display home that you can visit,” he advises. “Normally some of the workmanship quality shows from a single visit – paint finishes, consistent cuts, even flooring and walls.”
Volume builder vs custom builder
Although it’s not always the case, volume builders are usually nationally owned companies that have completely systemised their home-building process. Natalie Stevens, regional residential property developer and founder of www.buildinwarrnambool.com.au, says the main feature that attracts people to use a volume builder is their extensive range of floor plans that are already priced out, catering to budgets ranging from standard to luxury.
“Volume builders work on a standard inclusions and upgrade scale where you can add and subtract according to your budget. It’s a very simple option for people who want someone to take care of the whole process from start to finish,” she says.
However, she points out that when you choose a volume builder, every aspect of the build is typically finalised before construction starts. Every single detail is set out right down to the colour of the paint on your walls. “If you are someone who likes to improvise and change things as you go, you might be better suited to a custom build,” she says.
Custom builders are usually hands-on local tradesmen who pride themselves on the personal quality and uniqueness that they can bring to your home building experience. Custom builders suit people who like the idea of having some level of involvement in the home-building process, though that is completely optional.
If you choose a custom builder, you have the freedom and flexibility to improvise and make adjustments along the way. Although many custom builders have a range of plans available to inspire you, Stevens points out that you may have already engaged the services of an architect and/or draftsperson to create plans for your home.
“A custom builder will often work alongside clients during the design phase of their home. Otherwise, you’ll get quotes from custom builders after your designer has completed your working drawings,” she explains.
How do you get finance for the build?
If you need to borrow money to build your home, you’ll need to apply for a construction loan. These loans can be set up to allow you to purchase a vacant block of land first and then build on that land within a set timeframe or to fund the construction of your home if you already own the land.
Unlike a regular mortgage, where the lender gives you access to a big lump sum when you take out the loan, a construction loan is set up a little differently. The lender calculates the total amount you will need to borrow to pay your builder, and then allows you to access portions of this amount at specified times so you can pay your builder throughout the construction process. These loan withdrawals are known as progress draws and are a predetermined percentage of the total mortgage amount.
The lender will typically set a timeframe, such as one year, for the construction of your house and probably only require you to make interest payments while your home is being built. Once construction is complete and the builder has been paid, you will start making full principal and interest repayments.
Before you can qualify for a construction loan, you’ll need to have full plans drawn up and the project professionally costed by your builder. Some lenders may impose a slightly higher interest rate during the building process, so it’s important to compare construction loans and interest rates to find the right loan for your requirements.
How much does it cost to build a kit home?
If you’re looking for a low-cost option when building a house, you might want to consider a kit home. These homes are designed and built off-site, and then the materials are delivered by truck to your block of land for assembly.
Kit homes can be cost-effective, allowing owner-builders to do much of the work themselves, and come in a wide range of designs.
However, there are several factors that can affect the cost of a kit home.
The model. A four-bedroom kit home costs substantially more than a one-bedroom kit home. The floor space of your chosen design has a big impact as does the number of bathrooms and other spaces (e.g., a study).
The cladding option. Brick, weatherboard, render and more are available.
The site. Sites that are difficult to access or that require levelling could result in increased costs.
What’s included in the package. Some kit-home prices you see quoted online will include nothing but the bare shell of a home, while others will include everything from air conditioning to floor coverings.
Before you purchase a kit home, make sure you get an itemised list of what is included in the price. Will you just get the bare essentials, or does the price cover everything you need to move into your home? Will other jobs like site levelling or soil testing cost extra? The last thing you want is a raft of unexpected costs that cause a budget blowout, so make sure you know exactly what you’re getting yourself into before handing over any money.
Below are some rough guides to how much it costs to buy a kit home and get a licensed builder to construct it for you.
Two-bedroom kit home
Three-bedroom kit home
Four-bedroom kit home
$75,000–$160,000.
($35,000–$80,000 for kit and floor +
$40,000–$80,000 for labour and construction)
$160,000–$235,000.
($75,000–$110,000 for kit and floor +
$85,000–$125,000 for labour and construction)
$200,000–$290,000.
($85,000–$130,000 for kit and floor +
$115,000–$160,000 for labour and construction)
Are kit homes really cheaper than standard homes?
The answer to this question depends on a range of factors. For example, getting a builder to put the kit home together will cost a lot more than if you do most of the work yourself, but you also have to consider the cost of paying various trades (plumbers, electricians) to get your home to the point where it’s ready for you to move in. The floor space and design features you choose will also have a huge impact on the total cost.
The key to deciding whether a kit home is the most affordable option for you is to make sure you’re fully aware of what is included in the package and what you will have to pay extra for? You may need to pay for soil testing, laying slabs and any finishes you add yourself.
For some people with a level and easily accessible site, and who have the necessary skills and qualifications to do much of the work themselves, a kit home can be an affordable option. However, others will be able to find project-home builders that can build a home for around the same price as a kit home, so it’s important to shop around to compare costs.
It’s also worth pointing out that if you opt for a kit home, you may have trouble accessing the financing you need from your bank. Australian lenders take a very conservative approach to kit homes because if something goes wrong during the construction process, lenders could be left with only a vacant block of land as security. As a result, the majority of lenders won’t approve loans to owner-builders who want to construct a kit home, while those that do offer approval will impose tight restrictions on the loan to value ratio (LVR) they are willing to let you borrow.
Your chances of home loan approval are better if you’re planning on using a licensed builder to construct the kit home. However, you will still most likely need to pay for the kit upfront out of your own pocket and then begin construction before the bank will release any funds.
Choosing the right option
From the features you want in your home to your bank balance, there are a myriad of factors you need to consider before you start building a home. Make sure to research all your options thoroughly and obtain an accurate idea of the total cost involved before construction begins. This will ensure that your new home is ready on time and, most importantly, on budget.