Whether you are a first-time buyer, a young family looking to build a forever home, or you just entered retirement and its time to invest in building your dream house.
No matter what type of buyer you are, 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.
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.
Find the right lot of land
You cannot have a new home without somewhere to build it. Finding the right lot of land can be a challenge; we have attempted to make it easier to browse 100s of lots on our site.
However, you will need to take into consideration not just the lot but what the community will become in the future.
Remember, the new communities today are the suburbs of tomorrow.
So, keep this in consideration. If you find a parcel of land down the road from significant development, this may provide you with a more cost-effective lot at the same size as a lot in the master-planned development.
To ensure you broaden your horizons when searching for land and consider all new estates and communities in an area.
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.
10 Tips for Building a House
- Start by researching.
- Speak with those who have built homes before.
- Choose your builder carefully and ensure you consult them regarding your land purchase.
- Take the time to understand your contractual obligations.
- Seek a builder with an excellent reputation.
- Speak with a mortgage broker or your bank and arrange pre-approval.
- Make sure you love the area, and it's convenient.
- Don’t be afraid to ask for a deal.
- Ensure you have a contingency within your budget.
- Enjoy the process! It’s life-changing.
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.