How Much Does It Cost To Build A House?

This seems to be a question that Australians struggle to get a straight answer for since there is a lot of contradictory and incomplete information available from builders and the internet.

The motivation for this article is to provide some insight and transparency for Australians looking to build a new home

The first step is to understand the pricing models used by the different types of builders and the second step is to look for reputable sources of pricing information. It is also helpful to understand all the factors that impact on house costs. This is covered in these blogs  “Why is Custom Building More Expensive than Project Homes”,  “Knock  Down Rebuild Vs Renovating”, “How Your Land Will Impact The Cost Of Building” and “What factors influence a cost of a house”.

Understanding The pricing Models.

The new housing industry is dominated by the Volume Builders trying to capture as much of the market share as they can. This is a highly competitive market based on high volumes of houses built, standard designs and low margins.(See the blog “Volume Builders vs Custom Builders”)

 Volume builders do provide cheaper houses which is fine for first home buyers or those on a budget. But cheaper comes at the cost of limited or no variations to standard plans, hit and miss quality, and being treated as just a number.

Also pricing for these cheaper houses is unfortunately a case of smoke and mirrors. Many buyers are lured in by low prices advertised for these standard designs. What many buyers don’t understand is that these are the base prices for houses built on flat land (no more than 30cm fall) and don’t include the many fittings and features contained in the builders display homes

Look at the fine print and you will find that as a general rule of thumb the display homes shown off in the display villages are nearly double the base price. This can lead many clients to be frustrated with a process that sees the price escalate rapidly as soon as they start choosing options.

Other types of builders, particularly custom builders like Busby Homes, work to a different pricing model than the volume builders. They build a smaller number of homes designed to the specific requirements of their clients, at a higher quality and often on land that volume builders won’t touch.

These types of builders don’t have standard designs and must price each client’s job individually so there is little scope of smoke and mirrors. However, a smaller number of houses, custom designed and built at higher quality and often on difficult sites means higher prices.

Independent Sources

So where can you find independent advice on how much should it cost to build a house?

The best way to understand the answer to this question is to look at reputable third-party authorities who don’t have a vested interest in selling you a home.

One of these is the BMT Quantity Surveyors who are an Australian company that provides independent tax depreciation schedules to the commercial and residential real estate market

 They publish a guide on the price ranges for building a residential dwelling. Below is a chart from their website ( )

As you can see, they refer to three types of builders with a range of prices for each type.  

Volume Builders (which they call Shelf Design) have an average price range from $1430 for a low level of finish, $1595 for a medium level of finish and $1956 for high level of finish.

Custom Builders (which they call Unique Design) have an average price range from $2291 for a low level of finish, $2319 for a medium level of finish and $2692 for high level of finish.

Luxury, statement houses (which they call Architectural Design) have a price range from $3035 for a low level of finish, $3885 for a medium level of finish and $5435 for high level of finish.

Another reputable independent third-party authority, is Rider Levett Bucknall who are a Global company that specialises in cost management and quantity surveying, project management and advisory services. They have had a presence in Australia now for 70 years and have provided services for landmark projects such as the Sydney Opera House.

Below is a chart from their website ( )

As you can see, they provide a price range for each capital city. Looking at Melbourne they give a price range of $1,720 per square metre to $3,300 per square metre. It is likely that the $1,720 per square metre end of the scale would have parts of the home to be completed by owner after handover and/or having a site with perfect conditions, with very basic finishes, At the higher end you have the luxury home builders with all the bell and whistles and/or a complex block. Most Custom Home Builders generally sit in the range of $2,000 to $2,400 per square metre for a normal site with an upper range around $2,500 to $2,700 per square metre for difficult or sloping sites.

Hopefully this article has been informative to you and has helped get a more realistic understanding of how much it costs to build a house. If you are looking to build a Custom Home then Busby Homes can guild you through this journey, so please take the time to see our Price Guide for building a Custom Home and Contact Us for an initial design brief to explore the possibilities.

Related Articles