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How much does it cost to build a house in Melbourne


If you are planning to build a new home, cost is probably one of your biggest concerns. In addition to guiding what you can build, cost helps determine all of your design decisions. From the size of the structure to the quality of the fixtures and fittings, cost can impact every element of your build.
Your budget is also something that needs to be carefully managed throughout the build. Cost overruns are all too common, with most projects suffering from some unexpected expenses and delays. And there are always horror stories about people running out of money before finishing their build.
With all of this in mind, it is reasonable to wonder what you should expect when it comes to building costs. However, this is not a straightforward question with a simple answer. Here we look at the factors that impact the cost of your knockdown and build and how you can keep the price down.


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The average cost of building a house


According to key industry data sources, the average cost to build a home in Australia is around $473,000. However, there are a few important caveats to note here:


  • This price is a national average, and build costs vary from state to state.

  • This price does not include the cost of the land, architecture and design services, planning applications, or any site works.

  • This price reflects an average home size of 230m2.

  • This price reflects the average quality of finishes. Some homes are more basic; some are more luxurious.


With all of this in mind, many experts prefer to calculate indicative costings based on a per square rate (1 square = 9.29 square metres). Most also prefer to take into account the desired finish the homeowner is trying to achieve. In Melbourne, the average cost for each level of quality is:

•         $15,000 per square for a basic finish

•         $21,000 per square for an average finish

•         $27,000- $29,,000 per square for an architecturally designed, high-end custom build.


Again, it’s important to note that these prices only cover the actual build activities. The cost of the land and any earthworks and professional design services – as well as services like landscaping – are additional. There is also a range of other considerations that will impact the exact cost of your build.


IMPORTANT: The square rate of a builder should be taken with due diligence, what's included in the rate varies greatly from builder to builder. Top things to ask:

Factors influencing the cost of your Melbourne build


When building a house, you need to plan around many variables. These are what make each property unique and special. They are also what make each building project slightly different.
Each of these variations has a direct impact on the cost of the build. As such, they need to be taken into consideration when planning your budget. Specifically, you will need to think about:


  • The size of the structure: This is arguably the most obvious consideration when calculating your costs. The larger your floor plan, the more expensive it will be to build. This is because even big open spaces come at a cost (for extra flooring, plasterwork, structural beams, etc.).

  • The quality of the finishes: Generally speaking, the higher the quality of finish you are hoping to achieve, the more your build will cost. This is particularly true if you are planning to use any unique or particularly high-end materials. These usually require a specialist tradesperson and often take longer to get exactly right.

  • The complexity of your design: How you use the materials you choose can also add to the cost of your build. If your design is especially intricate or detailed, additional work will be required to get it right. Also, if you are planning to use any non-standard construction techniques, the build may take longer and require specific expertise.

  • The slope of your site: Earthworks are one of the biggest ‘hidden costs’ of a build. While all sites require some level of preparation, significant work will be required if you are building on a steep incline. Even if you work around the slope (e.g. by having a tiered or elevated design), this will still add cost.

  • The quality of your soil: Similar to the slope, the type of soil on your site can have a major impact on your build costs. If your soil is more difficult to work with (e.g. it is particularly sandy or rocky), additional earthworks may be required. This will be one of the first things your architect or engineer tests, and they should plan your design accordingly.

  • How long the build takes: The timeline of your build will have a major impact on the total cost. If you are working to a tight schedule, extra labour will often be required, increasing the price. Similarly, a particularly drawn-out build will also usually come at an additional cost, as your builder is tied up for longer.

  • Any additional planning considerations: Depending on where in Melbourne you are building, your design may have to account for anything from floods to bushfires. If your site is in an area prone to such issues, they will be stated in your planning requirements. This usually means extra work in both the preparation and build phases to ensure your design meets the required standards.

Tips for keeping your build cost down


The good news is that when it comes to building a house in Melbourne, it is not all added costs. While there are many factors that will make your build more expensive, there are also a few that can help reduce the price. There are also a few easy things every homeowner can do to avoid additional unnecessary expenses.
To help keep your build costs down, we recommend you:

  • Lock in your design before you begin building: One of the biggest traps many homeowners fall into is making variations during the building process. While most builders will allow you to make changes after construction has started, they usually come at a significant cost. As such, you should always carefully consider every aspect of your design before finalising your building contracts.

  • Use standard materials and techniques: Unless there is a specific finish or feature you really have to have, keeping your design simple should save you money. This does not mean you cannot come up with something truly unique – you just need to be a little creative. And remember, most standard materials can be used in a multitude of ways to achieve an enormous variety of finishes.

  • Work with an experienced designer: Choosing to invest in professional design services could save you money in the long run. An experienced designer should be able to spot any potential issues and help tailor your design to suit your needs. They should also be able to help you get the most from your budget, guiding you on where your money is best spent

  • Allow space for future improvement: It pays to remember that it is always possible to make changes in the future. However, this will be easier (and cheaper) to do if your initial design is developed with this in mind. So if your budget is limited, consider compromising on your finishes in the short-term, knowing you can upgrade them later.

As with any budgeting you do, managing your build costs is a balancing exercise. You need to have a clear view of what is most important and where you are willing to compromise. You also need to understand the impact of your spending decisions and be willing to prioritise (or not!) certain choices.



Need help planning your build budget?


At Carmel Homes, we are experts in costing build projects. As a leading custom home builder in Melbourne, we know what things cost and specialise in helping our clients plan their spending. We also offer free design consultations to help you get the most out of your budget.
Contact us for more information on our services and how we can help bring your dream home to life.

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