Future new homeowner! Are you feeling that buzz of excitement about building your own haven from the ground up? Whether you're picturing a custom sanctuary tailored just for you or exploring the world of project homes, there's a roadmap to follow.
With so many things to think about: that just-right plot of land, the maze of stamp duty, and the nitty-gritty of construction costs. And in a housing market that's always on the move, staying in-the-know about market shifts and be armed with the right knowledge can help you make the new home building journey stress free.
Whether you are a first-time buyer, a young family looking to build a forever home, or you just entered retirement, building a house can be one of the most overwhelming, confusing, and challenging experiences; however, it is also likely to be one of the most rewarding.
In this article, we will look at several key questions you may have when embarking on the home building journey.
We also offer practical tips and advice on how to get through the process of building a home with ease.
We will explore what it costs to build a new home, including any hidden extra costs that may take you by surprise; we will look at how cheaply you can build a house and guide you through the step by step process of building your dream home. So let us kick it off with the biggest question of them all.
What does it cost to build a new house?
The cost of building a new home is influenced by five key factors.
- House size
- Builder type
- House location
- Lot features
- Material types
To start with, let’s take a look at the average cost to build a house in Australia by state and territory.
The average cost to build a new home in Australia
It is plain to see, the increase in the cost to build a new home has been substantial over the past 15 years. Which goes to the saying there is no better time to enter the property market than now.
Why Build New Over Buying Established?
Ok, now that we got the first question on the top of your mind out of the way. Let's work out how if buying or building is for you. If you're balancing on the fence between building or buying, let's shed some light on that decision.
1. Your Canvas Awaits: When you build, every wall, every room, every tile becomes a reflection of your vision. Picturing a gourmet kitchen for those family cookouts or a panoramic window to gaze at the stars? Building ensures that every detail has your personal touch.
2. The Future is Green: In a world where sustainability matters, new homes are at the forefront. Crafted with eco-conscious materials and innovative methods, these homes aren’t just about living—they’re about living responsibly. Think top-tier insulation, power-conserving appliances, and windows that harmonize with nature.
3. Location Dreams Come True: Got a special neighborhood or that scenic lakeside spot in your sights? Sometimes, an existing home just won’t match the dream. But with building? You can plant your flag exactly where your heart desires.
From molding your living space brick by brick, to embracing the eco-friendly movement, and securing that dreamy backdrop, the allure of building a new home is undeniable. And for those looking to craft their personal haven, the rewards are boundless.
Lets take a look at one of the first considerations - House Size...
The most apparent impact on the cost of a new home build is simply the size. The larger the home, the more expensive it will be.
Larger homes require more materials, and labor exponentially increases with the size of the house.
One of the difficult things to understand is the average house size being built within Australia in 2020.
As reported by the ABS, we can see what happened in 2018-2019, the following table outlines the average new home size by square metre.
Due to the increase in the cost of building a new home, it is no surprise that the dwelling sizes have decreased over the same approximate 15 year period. What remains to be seen is if this will remain the case as the market is ever-evolving in 2020.
There are predominately two types of home builders to consider - a volume builder or a custom builder.
The main difference between them is the scale of their operations and the markets they seek to serve.
A volume or project builder is one who builds 100’s of homes per year typically across new estates or communities. These builders have the buying power backing them to secure some of the best industry rates.
Volume builders are often preferred by first home buyers, those on a budget, and buyers who are seeking an excellent brand reputation.
Volume builders also typically operate from a fixed but often vast catalogue, they also have the advantage in that you can also go visit their display homes.
This allows them to keep costs low and to service what people are generally looking for in floorplans. Each design is well researched and considered based upon consumer demands. Therefore, you are bound to find something within their offerings that suit your needs.
A custom builder typically does fewer jobs but offers a great deal of customisation throughout their home designs.
These builders operate in more established areas and service those new home buyers looking for complete control over their unique design. The flexibility and customisation, however, comes at a price. They are known to be more expensive as a result.
Depending on where you are building location can come into play, different suburbs or towns will naturally have different prices.
For example, if you are looking to build a remote area, you can expect that there will be an increase in fee due to the extra travel costs involved in getting materials to site for your build.
Or if you are building in the center of Sydney, you can expect to pay more, not only for the land but due to restrictions on what you could build i.e., if there are heritage overlays on an existing site.
The type of lot you plan on building on can have a significant impact on your total cost. There are many factors that come into play when preparing a lot of land for construction.
Items like rock removal, cut and fill, connections, to name a few. These all make up what is commonly referred to as site costs.
If you are building on relatively flat land, you can expect there will be less preparation required to build your new home. There will be fewer excavation costs, less soil removal, no retaining walls, etc.
If you are building on a lot of land which has a considerable amount of slope or fall. You will likely incur more expense because you may need retaining walls, additional soil removal, screw piles, or concrete piers.
To understand more about additional costs involved with site preparation we have written a simple guide for you, which can be found here.
The most elegant Italian marble, glass staircases, heated floors, designer light fixtures, and the many more extravagant items you can potentially have in your new home are lovely things to dream about. However, they all come at a price.
The great thing about the new home building market is, it has progressed so much in relation to achieving a high-end result without the price tag.
You can still achieve many of those more extravagant and expensive looks, without breaking the budget.
The types of materials ultimately will weigh into the price. If you have a designer working with you throughout the process, make use of their expertise to achieve a particular look within your budget! You’d be surprised at what is possible!
Hidden costs that pop up along the way
No one likes expensive surprises that will cost you thousands of dollars, but this can be avoided with excellent communication between the buyer and the builder.
The key to avoiding hidden costs is to make sure you take into consideration everything you need to and if you are unsure that you take the time to first research and then ask the questions when in doubt.
It is also essential to keep in mind and calculate any additional taxes, such as stamp duty, insurances, or conveyancing fees that you may incur during the building process.
But for the more specific items, which could save you significant headaches moving forward.
We have compiled a list of over 100 things people commonly forget when building a home. You can read that list here.
Can you build a house cheaply?
The answer is yes; it just depends on what outcome you are hoping to achieve. If you want a house for less than 30k, you can accomplish this by building a tiny home. You will likely spend more on the land than the house itself.
I have less than 200k to build a house - can I do it?
Building a house for less than 200k is entirely possible. As suggested above, you could build a tiny house which would come in much less than 200k. However, the amount of money you spend is highly dependent on what you decide to build.
You could consider a volume builder in a new community in the outer suburbs of a major city and achieve a result of less than 200k for the build cost.
You may wish to consider a house and land package, these are pre-costed designs on specific blocks of land which will help you meet a certain budget.
What it will predominantly come down to is the size of the house you wish to build and the lifestyle outcome you are hoping to achieve.
Keep in mind when building a house, you may have additional fees, which typically are not considered, such as conveyancing fees and stamp duty.
What are the steps I need to take to build a house?
- Start talking with builders
- Find the right lot of land for construction
- Secure pre-approval
- Buy land
- Sign a building contract
All homeowners started their homeownership journey with the invaluable process of research! It’s a process that the earlier you begin, the better informed you will be able to become and understand the various building costs involved.
We first suggest narrowing down the areas you are interested in to ensure you visit the area if you are not already familiar with it.
It's ideal to become acquainted with the amenities and look to the proposed amenities by jumping on local council websites if the area is not yet fully established.
What are houses selling for typically? What has been the trend in the area?
Building a new home is much more than just an investment, its an investment in your lifestyle and the quality of life you wish to live. However, it is good to have a basic understanding of the numbers before making a purchase.
Start talking with builders
This is a common mistake many new home buyers make when looking to build a home, they buy a lot of land without having conversations with builders first. When it comes to building their dream home, they find out they are limited by what they can build on that lot of land.
To avoid this potential headache. Start talking with builders early, get to know them, and what they can offer. They can also advise you to ensure you achieve the right build outcome to meet your requirements.
It’s the small things that they will be fully aware that you may not consider. I.e, one key point is building close to an easement, while your lot may seem to fit a variety of designs, the location and size of the easement can impact what you can build, and the closer you build the more expensive it will incur for you.
It’s super easy to avoid, start a conversation. One great place to start is packages!
Nailing Down Your Ideal Plot: An In-depth Look at Land Packages
For many eager to craft their dream homes, the lure of land packages is undeniable. But just like choosing the perfect blueprint for your future abode, selecting the right type of land package is crucial. But fear not, we're here to break it down for you!
1. Vacant Land Packages - A Blank Canvas Awaits: With these packages, you're looking at untouched land, ready and waiting for your vision to transform it. The sky's the limit – whether you have a grand design in mind or something quaint and cozy. Just remember, factors like location, access to utilities, and the land's dimensions are vital to consider. Dream big, but dream smart!
2. House and Land Combos - Two Birds, One Stone: Why juggle two tasks when you can handle them in one go? Here, you get a block of land along with a meticulously crafted house design tailored to it. These packages shave off a lot of decision-making time and ensure your home sits harmoniously with its plot.
3. Turnkey Packages - Just Turn the Key and Step Inside: The name says it all. You’re getting a fully-finished, ready-to-live-in home. From the foundational bricks to the aesthetic finishes, everything's taken care of. Perfect for those who want to sidestep the construction process and dive straight into making memories.
4. Dual Occupancy - Doubling Up on Opportunities: These are the multitaskers of land packages. If you're leaning towards a savvy investment or dreaming of a multi-gen household, these are the packages to eye. One land plot, two dwellings – it’s a recipe for versatile living and potential income. In your journey of building a dream home, it's not just about laying bricks or choosing paint colors. It starts with selecting the right foundation, both literally and figuratively.
By acquainting yourself with the various land packages out there is a great start, but if you are one who likes to dig deep into research and find your own block to begin with, here are some considerations..
The Art of Picking Your Plot: A Deep Dive into Block Selection
Choosing your plot of land is not just a transaction; it's a commitment, one where you decide to lay down roots, literally. And much like any enduring commitment, there's an art and science to making the right choice. So, let's navigate the nuances of land selection together.
A Patch Perfectly Suited for Your Vision:
You're not just picking a plot; you're choosing the canvas upon which your dream home will emerge. To make this choice wisely:
- Location, Location, Location! Yes, we've all heard it, but its importance can't be overstated. Think about your daily routines, your future plans, and pick a spot that complements your life's rhythms. And of course, the neighborhood's appreciation potential can be a considerable feather in your cap.
- Think Proportion: Don't just think about the space you need now, but envision your future needs. Whether it's an expansion, a garden, or simply a spacious backyard for summer barbecues, ensure you have room to grow.
- Sun’s Grace: A plot's orientation can either be your home's best friend or its constant nemesis. Aim for north-facing blocks for optimum sunlight, helping your home bask in its warmth and light, while also pocketing those energy savings.
- Know Before You Commit: Before saying ‘I do’ to a block, get well-acquainted with its zoning regulations. You don't want any surprise restrictions popping up when you're all set to bring your vision to life.
Going the Extra Mile: Utilities, Infrastructure, and More
As much as you'd be smitten by a plot's view or its neighbourhood charm, dig deeper (not literally!). Check:
- Utilities at Your Beck and Call: Ensuring that the basic utilities are in place or easily accessible is non-negotiable. These under-the-hood essentials ensure your home runs smoothly.
- Green and Clean Building: Stay updated with Council planning guidelines. Adhering to these ensures your home is not just a beauty to behold but also eco-friendly and sustainable.
- Natural Hurdles: Sometimes, nature has its way of dictating terms. Investigate if there are natural impediments or challenges linked to the plot, like waterlogging issues or too rocky terrains.
Remember, every plot has its personality, and it's all about finding the one that syncs with yours. By being thorough in your considerations, your block of land won't just be another piece of earth; it will be the foundation upon which dreams, memories, and futures are built.
Prior to placing a deposit on a lot of land or a new home, it is likely that the builder and land developer will require you to demonstrate that you have preapproval.
Without this, you may not be able to proceed.
By securing pre-approval before embarking on the purchasing process will help expedite the process once you find a perfect lot of land and a new home.
It will also set your expectations right from the beginning of what you can expect a lender will loan to you.
Again, just like speaking to a builder early on, talking to your bank or local mortgage broker can help prepare you for what you are about to embark upon.
Buying land from a new community is a relatively straightforward process; you will place a deposit on that land, and once the land is ready for construction and the title has been granted for the lot - you will settle on the land.
Land titles can take many months, and you will not be able to begin construction until the land has been titled.
It is crucial you understand this and have a discussion with the land sales agent as to when titles can be expected. If you are on a tight deadline to build, ask them if they have had any prior delays in gaining titles on previously constructed stages.
This will help you gain an understanding if you may need to be flexible on your construction start date.
- If you are buying an established property but plan to knockdown rebuild, you also need to consider demolition costs and local council building permit approval.
Sign a building contract
When you sign a building contract, this will be one of the last steps before you get to the fun stuff - picking out all your colors and designing the future home you want to occupy.
It is likely you will receive a start date; providing your land is titled, and this start date may vary depending on a builder’s schedules.
Typically volume builders will only commit to a certain number of starts per month. So, it’s crucial you ask your sales consultant as to when the earliest start date is.
If your land isn’t titled for some time, often builders will have incentives to sign a contract on today’s prices which may be favorable for you to avoid any price increases.
What is the construction process of building a home?
There are 9 standard stages of constructing a new house.
Stage 1 - Site preparation
Site preparation means ensuring your lot of land is ready for construction; this includes; excavation, rock removal, cut and fill soil removal, and potentially demolition if you are undertaking a knockdown rebuild.
Stage 2 - Slab
Laying the slab (the concrete foundations) of your home is the next stage in construction.
The slab that will be used will be based upon a soil and survey test which has been carried out by the builder, this determines what slab type needs to be used i.e the thickness of the slab based upon the soil conditions of your specific lot.
It may also include the installation and use of concrete piers or screw piles, which provide additional reinforcement to your slab.
It’s crucial to have the right slab for your lot of land as it ensures your new home's longevity and structural integrity.
Stage 3 - Framing
The frame is when your house starts to take shape - often, this stage takes many people by surprise at how quickly it comes to life. This is when the internal and external are constructed; it also includes; installation of plumbing, electrical, and gas requirements.
Stage 4 - Roof installation
Installing your roof and tiling commences at stage 4. If you have opted for colorbond instead of tiles, this will be part of the process; it will also include all required guttering.
Stage 5 - Lockup
Time to secure your house, windows, and doors will be added, which will prepare your home for the finer things to be included.
Stage 6 - Fittings and Fixtures
This is the fun part when all the selections you made regarding benchtops, appliances, tiling are installed. Your house is now approaching completion!
Stage 7 - Completion
Your house has now been completed and is ready for a final inspection, during this inspection you will be able to examine the work and ensure that everything is of the highest quality if any minor issues need to be amended - a list will be made and the builder will ensure they are rectified.
Stage 8 - Hand over
The big day has arrived! It’s now time to move into your house, this is the stage in which you will get your keys and your last payment will be made.
Stage 9 - Maintenance
The maintenance stage will depend on the builder you choose to build with, this is a predetermined period of time where the builder will attend to fixes within your house.
Each builder is different in the time frame they offer and how they handle this process. Be sure to consult yours to understand what they will and will not address.
Common Challenges During the Building Process
During the building process, homeowners may encounter common challenges that can cause frustration and disrupt the construction timeline. These challenges include delays in construction, unexpected costs, design changes, and communication issues.
Delays in construction can occur due to various factors such as weather conditions, material shortages, or contractor scheduling conflicts. These delays can push back the completion date of the project, causing inconvenience for homeowners.
Unexpected costs can also be a challenge during the building process. Unforeseen issues, such as hidden structural problems or changes in building regulations, can lead to additional expenses that were not included in the initial budget.
Design changes can cause delays and additional costs as well. Homeowners may decide to make alterations to the original plans, which can require adjustments to the construction process and may involve extra charges.
Communication issues between homeowners and builders can create misunderstandings and delays. Clear and open communication is essential throughout the building process to address any concerns or changes promptly.
To mitigate these challenges, proactive planning is crucial. Homeowners should thoroughly research the building process, including understanding the stages of construction and the potential challenges that may arise.
Clear communication with the builder is also important, as it helps to address any issues promptly. Additionally, hiring experienced professionals can help minimize delays and unexpected costs, as they have the knowledge and expertise to navigate potential challenges efficiently.
By being proactive, maintaining clear communication, and working with experienced professionals, homeowners can navigate the common challenges that may arise during the building process more effectively and ensure a smoother construction journey.
Making the building journey easier involves staying organized, communicating effectively, and managing expectations. Thorough planning and research are key, as is working with a reputable builder.
To stay organized, create a timeline of the building process, including key milestones and deadlines. Keep important documents organized and easily accessible. Use a notebook or digital tool to record notes, decisions, and any changes to the original plans.
Communication is crucial. Establish a regular communication channel with your builder, whether it's through email, phone calls, or in-person meetings. Clearly communicate your expectations, concerns, and any changes to the plans. Be open to feedback and responsive to inquiries from your builder.
Thorough planning and research beforehand can save time and money. Understand the building process, including the stages of construction. Research potential challenges or additional costs that may arise. Explore different building materials and fixtures to find the most suitable options for your needs and budget.
Working with a reputable builder is essential. Look for builders with a record, positive customer reviews, and appropriate certifications. A good builder will have experience in navigating challenges and managing unexpected issues, ensuring a smoother building journey.
By staying organized, communicating effectively, planning thoroughly, and working with a reputable builder, you can make your building journey easier and enjoy the process of creating your dream home.
Building on Stilts or Stumps?
The most common reason for building a house on stilts and stumps is that they allow you to build over rocky land and steep slopes.
While you may be able to pick up a cheap lot of land with a lot of slope, it is likely to increase your construction cost and limit the type of builder willing to take on the job.
Before purchasing that hillside lot, make sure to consult a builder so you can get a realistic idea of what it will cost you to build.
What is the timeline for building a house
A new home build will typically take between 4 to 12 months.
An example of a standard timeline:
- Breaking ground: 1 to 3 weeks
- Putting in the foundation: 1 to 3 weeks.
- Framing and roofing: 1 to 2 months.
- Interiors: 1 to 2 months.
The above is based on a volume builder; if you are building a custom home, you can expect for the timeline to be longer.
You can read our more detailed write up here for other considerations on what impacts the timeline of a new build.
Is building a house cheaper than buying?
It is possible to build for less than an established property providing you find the right builder, right lot, and the right market.
If you don’t, it could be quite possible to find an existing house to buy for less than you could build one.
It's always best to do your homework when making any type of property investment; building a new home is no different.
Compare the established market to quotes you have received from new home builders, which will help you determine if indeed building is cheaper than buying.
One of the greatest advantages of building your own home is simply being able to design it to your liking. It will most likely be one of the most rewarding experiences of your life.
Understanding Stamp Duty and Its Implications
One of the financial components often overlooked by many first-time home builders is the stamp duty. This is a tax imposed on various acquisitions, including real estate. The amount you'll have to pay can vary significantly based on the state or territory you're in and the value of the property or land you're buying. It's essential to remember that when buying land and building separately, you'll often pay stamp duty on the land purchase only. However, if you're buying a house and land package, the stamp duty may be calculated on the total value.
Hidden Costs: What Lies Beyond the Blueprint
Beyond the evident construction costs and stamp duty, several hidden expenses can arise during the building process:
- Legal Fees: Engaging a solicitor or conveyancer to handle the legalities of property acquisition is crucial. They'll ensure all paperwork is in order, and no legal barriers will halt construction.
- Building Inspections: Before construction, and sometimes during, inspections might be needed. These inspections ensure the land and construction align with building codes and regulations.
- Connection Fees: Connecting utilities, such as water, electricity, gas, and the internet, can sometimes come with additional fees, especially if the utilities need to be extended from the main lines.
- Landscaping: While many focus on the home itself, the surrounding landscape is equally important. After construction, you might want to invest in landscaping to make the place truly feel like 'home'.
- Contingency Budget: It's always a smart move to set aside an extra 5-10% of your total budget for unexpected costs. This might cover sudden material price increases, unforeseen building challenges, or changes you decide to make during construction.