What is the cost of a new home?

When investigating the various options for your new home and setting your budget, this will always be one of the first questions everyone will ask. Unfortunately, it is difficult to answer because homes have so many variables and options. You also need to create an initial budget that plans for the long-term running costs of your new build. So at Three Hat Buildings I strive to educate every prospective buyer, even if it means directing you to a different architect, custom builder or pre-designed product. Nonetheless I'll do my best to provide some reasonable price ranges.

Keep in mind that any prices, whether for new houses, renovations, or anything else, are only estimates of probable costs based on 2022 averages. Prices may and frequently do vary greatly based on the location, size, and design of your home, the builder you choose, and a number of other factors. Additionally it is very difficult, if not impossible, to compare the cost of an architectural / custom build to that of a 'volume builder'. The reason for this is that custom builders operate on 25% margins, with a net profit of roughly 10%, while volume builders, as the name implies, work on razor-thin margins offset by a massive number of houses.

So what will a new build cost me? 

Let’s refine that a little more, what will it cost me to build a custom (never been built before) 300 m2 to completion (turnkey) new home in Melbourne? 

With a base building rate around $3,200 - $4,600+ / m2  (x9.29 to convert to square feet) most new custom builds will therefore cost between $960,000 and $1.38m to construct, plus design and permits,and will usually include some basic extra landscaping items like a driveway.

As with any large home project, the cost of this project can skyrocket as you add more alternatives and sophisticated designs, such as higher ceilings, cantilevers, split levels, basements, pools, natural stone, various accessories, and so on. Additionally the bigger your home is, the more upgrades are going to cost.

Also as most people know, there are many variable factors to your build itself, from the labour rates of trades, which vary due to skill/or availability, supply costs and as well as construction and planning codes and insurances. All this means is that you should also allow for a contingency. I generally recommend two, one for during design and one for construction.

How do the costs typically breakdown?

While a much rarer question this will provide some useful insight when comparing various options and getting an understanding of the expected costs associated with the construction of your project.

Cost estimates generally are broken down into estimates of materials, labour (trades), products, and other expenses. Of those there is usually around a dozen trades that makeup 60% or more of the total construction cost. Using the above example of a 300m2 home most of these would likely be:

Builder preliminaries / site costs - 5 to 10%

Concreter - 8 to 12%

Carpenter (including fix) - 12 to 16%

Plumber - 3 to 6%

Roof plumber - 5 to 6%

Windows - 6 to 9%

Electrician - 3 to 5%

Mechanical (mostly HVAC) - 3 to 7%

Plasterer - 3 to 6%

Tiler - 2 to 5%

Joinery - 8 to 15%

Painter - 3 to 5%

I believe this is important to understand because people can often focus on the inclusions of various products but the number one thing influencing the cost of your new build is nearly always the size of the house itself.

The second most significant factor influencing the cost of your new home is the site you have chosen.  It is also what may make your new house spectacular. Difficult slopes, salt air, and long narrow shapes all have a significant impact on the cost. This is where it is essential to work with experienced professionals. All too often, I have spoken with home owners who got caught out because their architect or builder hadn’t worked on that type of site before.

Again, remember that the figures above are simply estimates, and your actual expenses will vary. My hope is your now have a better understanding of the prospective costs and can start putting together your construction budget.

Of course, I'd be delighted to help you get started on your new home journey. Simply click on the icon below to say hello!