“How much is it to build a house?” is a question many Australians are asking these days, especially in today’s soaring housing market. Building your own house from scratch is an exciting prospect, as the cost of buying a pre-existing home becomes increasingly out of reach, but it comes with many considerations and factors that influence the final price.
While established housing comes with a clear price tag, making it easy to budget for the purchase, considering the cost of building a house isn’t as straightforward; numerous factors influence the price you end up paying.
So, here are a few things you should consider when establishing how much it might cost you to build your dream home.
How Much Does It Cost To Build A House: Including The Cost of Land
The first consideration when determining the cost of building a house or a fixed-price building contract is the price of the land on which it will be built on.
Land prices vary significantly across Australia, and Sydney is known for its high land costs. According to the Urban Development Institute of Australia, the average land cost in Sydney in 2020 was $495,000. In comparison, Adelaide’s land cost was $183,460, and Melbourne’s was $319,000.
These figures continue to climb as the years go on. Additionally, site costs can vary depending on the land’s condition and location, influencing the final expenditure on the home construction process.
Factors Influencing the House Construction Costs
Home building costs encompass several key factors that influence the construction cost of a house, including:
Size of the House
The size of the house plays a significant role in determining the cost of construction. Commsec estimates that the average house in Australia is around 195.8 square metres, with three bedrooms, and sits on approximately 470 square metres of land.
However, new builds tend to be larger, with an average size of 235.8 square metres. A larger house with more bedrooms will require more building materials, specialised equipment, and labour, leading to higher construction costs. Larger houses also necessitate more materials, increasing overall construction costs.
Higher Quality Materials and Finishes
The quality of materials and finishes you choose for your house can greatly impact the overall cost. While opting for high-quality materials may result in better craftsmanship and finishing, it can also increase construction expenses per square metre.
Alternatively, using cost-effective materials can help balance quality and affordability, achieving a desirable aesthetic while remaining within budget.
Conversely, choosing cheaper and lower-quality materials may initially save you money, but you may incur additional costs in the long run for repairs and replacements.
Labour Costs
The cost of materials and labour in the building industry can vary based on the quality of materials, finishes, and the complexity of the design. Industry-wide factors such as labour shortages and market demands significantly influence labour costs. Consulting with reputable home builders in Sydney can provide detailed pricing information based on your desired specifications.
Design Complexity
The complexity of the design plays a crucial role in house construction costs. Simpler designs are generally less expensive and quicker to build, while more complex designs can be costlier and take longer to complete.
So, you need to carefully consider the design elements and consult with professionals to balance your vision and budget.
Location and Site Cost Considerations
The location and site where you plan to build your house can also affect the cost. Certain areas may have specific council requirements and planning overlays that add to construction expenses. When building a new house, these factors can significantly influence the overall budget. Additionally, the condition and terrain of the land can impact the cost, with architects often maximising the lot and floor space to make the most of the site.
Timeframes and Supply Chain Issues
Timeframes and supply chain issues can significantly impact the cost of building a house. Delays in material deliveries and supply chain disruptions can cause project stalls and increase holding and accommodation costs. These challenges are particularly prevalent in the building industry, where labour shortages and market demands further complicate project timelines.
You should always factor in potential delays and work closely with your builder to manage timeframes effectively.
The Cost of Land
Land cost is a significant factor in determining the overall cost of building a house. Land prices vary greatly depending on location, size, and zoning regulations. The median lot price in Australia can range from $245,250 in Perth to $641,250 in Greater Sydney.
Location and Land Prices
The location of the land plays a crucial role in determining its price. Land prices tend to be higher in urban areas, particularly in cities like Sydney and Melbourne, due to the proximity to amenities, infrastructure, and job opportunities. In contrast, land prices in rural or suburban areas tend to be lower. Additionally, the size of the land also affects its price, with larger blocks of land typically costing more.
Managing Building Costs
Managing building costs is essential to ensure your dream home is built within your budget. Here are some tips to help you manage building costs effectively:
Setting a Realistic Budget
Setting a realistic budget is the first step in managing building costs. It’s essential to consider the upfront costs of building the house and any potential ongoing expenses that may arise during construction.
A realistic budget should consider the cost of land, construction, and any additional features or upgrades you may want to include.
Obtaining Multiple Quotes
Obtaining multiple quotes from reputable builders is an excellent way to compare prices and select the most cost-effective option. When obtaining quotes, provide each builder with the same set of plans and specifications to ensure that you’re comparing apples with apples. Additionally, be sure to ask about any additional costs or fees that may not be included in the initial quote.
By following these tips, you can effectively manage building costs and ensure your dream home is built within your budget. Remember to always prioritise quality and consider the long-term benefits of investing in higher-quality materials and construction methods.
The Average Building Costs in 2023
Building a house in Australia can be pricey, ranging from around $1,300 per square metre to $3,900 plus per square metre. However, determining the exact cost can be tricky.
Prospective builders, especially first-time home buyers, can take advantage of various government grants to help reduce these costs. The NSW Government offers the $10,000 First Home Owner Grant for new home construction and purchases.
Additionally, programs like the First Home Buyers Assistance scheme provide exemptions on transfer duties, making home construction more affordable. Eligibility criteria for these grants typically include being a first-time home buyer and meeting specific residency requirements.
That’s because the final price tag depends on a variety of factors, including the level of finishes, the materials chosen, the labour required, and even the state of the economy.
The Current State of Affairs
Global supply chain shortages have significantly impacted the construction industry in Australia, leading to increased costs for building materials.
Additionally, optional extras such as landscaping, fencing, and swimming pools can add tens of thousands of dollars to the initial budget.
However, there is some good news.
While global supply chain issues caused by the Russia-Ukraine war and labour shortages continue to impact the cost of construction materials, consumers have reacted negatively to the Reserve Bank of Australia raising the cash rate to deal with inflationary pressures.
As a result, the pipeline for building projects has been reduced, with new building prices down 41% since their historic high in March 2022. This reduction should help alleviate construction costs in the future.
Additionally, as skilled migration continues to ramp up, construction workers will be more available, and the costs associated with some trades and labour will hopefully slow.
This all has a knock-on effect on the consumer price index. If construction cost growth reduces, it would help lower the inflation rate as well.
So, it’s not all doom and gloom.
What Does This Mean for You?
You’re probably wondering how this translates into the cost per square metre because that’s what really matters.
As mentioned earlier, building costs vary significantly based on your location, the project design, and the quality of the finishes. The final cost will be unique to the build. To save money, consider smart planning and decision-making, such as choosing efficient floor plans and appropriate land sizes, which can significantly impact overall costs.
Here’s a rough guide to what it might cost to build a 3-bedroom, quality-constructed brick veneer house across the major cities:
| City | Cost Per Square metre |
| Sydney | $2,000 |
| Brisbane | $1,900 – $2,300 |
| Melbourne | $1,900 – $2,100 |
| Adelaide | $1,900 – $2,100 |
| Perth | $1,965 – $2,400 |
| Canberra | $1,965 – $2,400 |
| Hobart | $1,965 – $2,400 |
| Cairns | $2,200 – $2,600 |
| Darwin | $2,200 – $2,700 |
These figures are rough estimates, and the actual cost will depend on the specifics of your project.
Sure, here’s a hypothetical case study that could be included in your article to make it more engaging and relatable:
Example: The Wilsons’ Building Journey
The following scenario is a hypothetical example. All figures are for the purpose of an example and may differ from your individual situation.
Sarah and Michael Wilson, a young couple from Melbourne, recently embarked on the journey of building their dream home. They purchased a 500-square-metre block of land in the outer suburbs for $350,000 and set a budget of $400,000 for the construction of their four-bedroom, two-bathroom house.
When evaluating their home building costs, the Wilsons considered various factors that influenced their budget, such as the size of the land and the specific requirements of their design.
The Wilsons chose a simple, single-storey design with a total floor area of 220 square metres. They opted for a mix of mid-range and high-end finishes, including:
- Engineered hardwood flooring throughout the living areas
- Carpet in the bedrooms
- Stone benchtops in the kitchen and bathrooms
- High-end appliances
- Double-glazed windows
The construction process took approximately eight months, and the final cost breakdown was as follows:
- Site preparation and foundation: $40,000
- Framing: $60,000
- Roofing: $30,000
- Electrical and plumbing: $50,000
- Insulation and drywall: $30,000
- Interior and exterior finishes: $120,000
- Landscaping: $20,000
- Miscellaneous costs and contingencies: $50,000
The total cost of construction came to $400,000, which was right on budget. However, the Wilsons encountered a few unexpected expenses along the way, such as additional site work required due to poor soil conditions and upgrades to the electrical system to accommodate their high-end appliances.
Takeaways from the Wilsons’ Experience
The Wilsons’ story highlights several key points:
- Land costs can be a significant portion of the overall budget, especially in high-demand areas like Melbourne.
- Choosing a simple design and a mix of mid-range and high-end finishes can help keep costs under control while still achieving a high-quality result.
- Utilizing cost-effective materials can balance quality and affordability, helping to achieve a desirable aesthetic while remaining within budget.
- Unexpected expenses can arise during the construction process, so it’s important to have a contingency fund built into the budget, and to consult a cost estimator expert to get an accurate assessment.
Key Takeaways
The average cost of building a house in Australia is influenced by factors such as land prices, house size, design complexity, and the quality of materials and finishes. Various factors, including land size and state differences, significantly impact home building costs, making it essential to evaluate these aspects carefully.
Carefully considering these factors and working closely with professionals can help you plan and budget effectively for your dream home. Additional expenses such as design services, permits, and construction materials should be accounted for to ensure your project stays within your financial means.
Building a house is a significant investment, and making informed decisions is important. Consult with quantity surveying experts to gain a better understanding of the specific costs and requirements for your unique project.
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Tuan is an award winning Quantity Surveyor and leads Duo Tax Quantity Surveyors – Australia’s fastest growing provider of Tax Depreciation.
