How Much Does It Cost To Build A House?

How much does it cost to build a new house?

Are you considering building a new house or investment property but have no idea about how much it will cost?

Are you worried that because you don’t have all the information and your not a builder you will get ripped off?

If so then this article will explain how much does it cost to build a house and allow you to accurately do the numbers and plan for your new home.

Looking to buy or build an investment property in the next 12 months? Learn more about how we can help you here…

How much does it cost to build a house?

How much does it cost to build a new house?

Unfortunately this question is like asking your partner what they’d like to change about you. On the surface it seems like a basic question, but when you start drilling into the nitty gritty it opens up a whole can of worms.

The short answer is it really depends on a combination of factors including:

  • Location
  • The builder
  • How much they like you
  • If you have a relationship
  • If you’ve built before
  • What you’re looking to build
  • How clearly you can articulate your vision for the home
  • How easy you are to deal with
  • How much margin they’re looking to make
  • How desperate they are to make the sale
  • The timing of the building cycle
  • How quickly you sign off on the contract
  • How well you can interpret their quote
  • The inclusions you choose
  • The size of the home
  • The complexity of the design
  • Whether you are looking for something from their standard range or are looking to customize
  • How well you can negotiate
  • The land you select
  • The price of trades and suppliers in the region

After building numerous homes, working as the marketing manager for one of the countries largest builders and helping countless clients, as a buyers agent, the only thing I can say for certain is nothing is certain when it comes to price.

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Rules of thumb to take into account when looking at the cost of building a house:

  • You should work towards a price of between $1200 and $1700 per m2
  • The larger the home the cheaper the price per m2
  • Its cheaper to build a single story home than it is to build a double story home
  • Its cheaper to build on a flat block than it is to build a on sloping block
  • The type of soil you’re building on can add thousands of dollars to the cost of your build
  • Just because a builder is more expensive doesn’t mean they’re a better builder. These more expensive builders often run more expensive businesses or charge a premium because their branding looks beautiful
  • On the flip side, there are builders that are cheap and nasty, which really are cheap and nasty
  • The level of inclusions you select can add tens of thousands of dollars to the cost of your build
  • Most builders do not include driveways ($7,000 – $10,000), landscaping ($3,000 – $7,000), fences ($3,000 – $7,000), carpets and tiles ($3,000), blinds $3,000), site, engineering and basic costs ($10,000+) in their quotes
  • You can comfortably negotiate a 1% to 3% discount on any quote if you’re prepared to move forward quickly
  • You can often negotiate a discount if you are going to build more than one home with the same builder
  • Make sure your contract is a fixed price before you sign
  • Each time you make a change to your contract, design or inclusions, after you’ve signed a contract you will be charged for it

A great place to begin reviewing other customers with Australia’s leading building companies is on Product Review.

Can I afford to build a new home?

Before you even think about building or looking for a builder it’s important to find out how much you can borrow.

Find out how much you can afford to borrow using a simple online calculator click here.

Understanding how much you can afford to borrow is important, as it will shape:

  • Where you buy
  • What type of land you buy
  • How much you spend on land
  • The type of home you build
  • The level of inclusion, fittings and fixture you select for the home

Understanding how much you can afford to borrow will also help you negotiate with your builder as you will have a clear idea of how much you can afford / are prepared to pay and you will be ready to move forward faster which can be used to negotiate on price.

How do I get accurate quotes and pricing?

This is one of the hardest parts of building a new home as many builders:

  • Will not give fixed price quotes
  • Do not give 100% accurate quotes
  • Will charge you for additional upgrades after you have signed a contract
  • Will deliberately leave things out of their initial quote to suck you in with a low price (including driveways, landscaping, fences, carpets, blinds, tiles, site costs, engineering costs and basic costs)

To help you compare builders (and apples with apples) we have put together a home building checklist, which includes all of the features, you’ll want included in your contract before signing off on a quote. Download your FREE home building checklist here.

You can take this checklist into your builder and make sure that each of these items are included in the quote before you sign off.

Common mistakes first time home builders make when looking to get a quote for a new home:

  • Look up a builders website and download a price list
  • Ring up a builder and ask for a price list
  • Drop into a builders office or display home and get them to quote a job on the spot

If you really want to get accurate pricing from a builder you need to:

  • Be honest about how much you’re prepared to spend with them upfront
  • Identify your block of land
  • Identify a design
  • Select your inclusions

The key to get accurate pricing is to be specific and to identify everything you would like to do upfront, before you sign a contract.

Does the cost of building a new home vary from builder to builder?

Absolutely.

Every builder uses different trades, suppliers and products.

Each builder also charges a different gross profit margin of their homes. This generally ranges from between 14% and 25% gross profit. Knowing how much gross profit a builder charges on a job puts you in a powerful position to negotiate.

What additional costs do I need to take into account when building a new house?

As you can see from this article I’m a firm believer in the fixed price quote.

Saying this, its important to make sure the following items are included in your quote, if not you may be up for:

Building:

  • Driveway ($7,000 – $10,000)
  • Landscaping and fences ($3,000 – $10,000)
  • Carpets and tiles ($3,000)
  • Blinds ($3,000)

Soil:

  • Site, engineering and basic costs ($10,000 – $20,000+)

Slope:

  • For every one meter you are likely to pay an additional $6,000

Who are the biggest builders in Australia?

Each year the HIA releases a report titled: Australia’s Largest Home Builders and Residential Developers Top 100. View the HIA Top 100 Report now.

Australia's largest 20 home builders

Building is one of the largest financial investments most of us will ever make and still very much part of the Australian dream.

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Don’t let this blog or the thought of building a new home overwhelm you.

At the end of the day if you do your research, consult a number of builders and make sure you get a fixed price contract you will end up ahead of the curve and with a home or investment property you can be proud of.

I’d love to hear more about your new home building experiences in the comments section below.

Ben Everingham

About

Ben founded Pumped On Property after building a multi-million dollar property portfolio over a 5 year period. His mission is to show you how to replace your income through property investing so you can do what you love…full time.

9 thoughts on “How Much Does It Cost To Build A House?

  1. Although people want to know how much they can borrow – I think the more important question is how much can I afford to repay.
    Looking forward to reading more from you as I start the build on my own house.

  2. GREAT article Ben!

    You’re clearly speaking from plenty of real life experience here and it really shows through in the detail of this article – I’ll definitely be recommending this one to my readers.

    I can see you quickly becoming the online authority for those looking at building their own homes – maybe a paid “ultimate guide” could be coming soon?

    Looking forward to what you come out with next.

    Cheers
    Adam

  3. A builder has quoted us $1500 per square metre to build from scratch a 13 metre X 4 metre part of the home but has said this doesn’t include kitchen or bathroom. Is this strange that he can charge this much but doesn’t include even basic level kitchen and bathroom is is $1500 per M2 quote?

    thanks

    1. Hi.

      This does sound expensive unless:

      – Your a building an architecturally designed house
      – You are building a small house <150m2
      - You are using high end building materials
      - You builder is only small and builds 2 - 3 homes per year

      If you would like to give me a call to discuss this situation in more detail please give me a ring on 0435065794.

  4. Hi Ben,

    Thanks for the article. Similar to Maud builders are quoting prices of $2000 or more per sqm. Yes the 2 townhouses are slightly smaller than 150sqm and did factor this in but some builders are quoting a lot higher than that.

    Thanks

  5. Hi, we paid deposit for a vacant land area 323.6m and thinking to build a two storey house. Question is how much would it cost me to build average 4 bedrooms and three bathrooms? Its at East Village area.

    In addition, could we take up land and mortgage loan together?

  6. Since you mentioned that the cost of building the house all goes down to how complex its design is, I thought that one should hire a professional’s residential design reading service. With their help, a homeowner can spot weak spots in the home that can cause mold or electricity problems later on. Also, they can help modify the design to minimize these spots and decrease the chances of getting structural issues with a home later on.

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