How much does it cost to build a house in Melbourne?

Melbourne, Victoria, Australia. Picture: Getty

According to the latest Australian construction industry research, building a new home costs between $2550sqm to $6600sqm.

Cost of building a house in Melbourne

A big factor in what determines the cost of building your new home will be, is the number of bedrooms you choose to have.

This is because constructing a home is based on a cost of “per square metre” basis, hence the more bedrooms you have the larger your house is.

However, residential builder and BuildHer founder Rebeka Morgan said this price can still be quite varied depending on the finishes and details selected.

“For instance, the cost of adding custom joinery, higher-end materials, or specialty features like a bespoke kitchen or bathroom can significantly increase your budget,” she said.

Building a standard three-bedroom house spanning 175sqm of living space will cost in the range of $385,000 to $962,500.

Ms Morgan said building a premium home could cost as much as $1.4 million, with this dependent on custom finishes and the quality of materials chosen.

A two bedroom home build in Melbourne will cost anywhere from $264,000 to $660,000 based on an internal floorplan size of 120sqm.

A standard four bedroom home with two bathrooms will cost anywhere from $572,000 to $1,430,000, assuming it has a floorplan spanning 260sqm

A five-bedroom house build in Melbourne will likely cost between $660,000 and $1,650,000 for a residence spanning 300sqm.

Cost of building a single storey or two-storey home in Melbourne

Adding a second level to your Melbourne house build will add as much as $1000sqm to the cost, Ms Morgan estimates.

The higher costs involved are due to more complex construction, including scaffolding, staircases, and extra external walls, as well as the additional labour required, she said.

Typically, adding a second storey drives the total build cost up by 10% to 20%.

For example, a one level four-bedroom, two-bathroom home in Melbourne will cost $800,000, but making the same size home a two-storey, will drive the final cost up to anywhere from $880,000 to $960,000.

Other factors that impacts the cost of building a home in Melbourne

There are several factors that impact the cost of building a home in Melbourne.

The cost of land

The average cost of vacant land in Melbourne is $394,000, according to one report. However, land in Melbourne’s prestigious locales will have a higher price tag. Understandably, the more the land costs, the higher the overall house build cost will be.

Stamp duty

The stamp duty you pay is determined by the purchase price and because land typically is cheaper than buying an established home, you reduce the duty you owe significantly.

Stamp duty is essentially paying the government a fee for transferring a property’s title into your name. It is calculated as a percentage of the property’s purchase price and rates are tiered.

Other fees

Building and pest inspections, removalist and solicitor’s fees, and even the cost of renting another home while your new home is built, are other financial outlays to consider. 

The size of home

A new home in Melbourne is an average size 250.3sqm, which is larger than the average Australian home size of 195.8sqm, according to a Commsec report.

Larger homes require more materials, and as a result will cost more.

Materials

More often than not, many new homes are built to high specifications, according to Ms Morgan.

 “Homeowners today are choosing higher-end materials, custom joinery, and specialty finishes, which significantly drive up the overall cost,” she said.

Your home site

Sloping sites, uneven land, or difficult land lots will cost extra due to the extra site works required such as excavation, retaining walls, other complex construction processes, Ms Morgan said,

 “You also need to think about soil quality and drainage, which can impact the foundation work needed.”

Unforeseen delays

Unfortunately unexpected costs can arise due to weather and other delays.

These unforeseen delays – such as bad weather – can cause significant delays in the timeframe of a new home build which can hinder scheduling, and push timelines out.

“Delays aren’t inevitable, but having a realistic timeframe and understanding how the project works are crucial,” Ms Morgan said.

“Keeping the builder’s schedule on track and being proactive about ordering materials can save a lot of headaches – and costs – down the line.”

The complexity of your home design

Building a project home is more affordable than a custom built design because the building company can order materials in bulk and repeat the same design multiple times.

“While custom homes allow for personalisation, they come with added expense from the design phase right through to construction,” Ms Morgan said.

Other costs apart from the actual house build

Driveway construction, fencing and landscaping are other added costs to a new home build.

And if you are knocking down an old home to make way for the build of a new home or a duplex, other costs such as the increased complexity of the design, and the rental income or sale profit from the second dwelling need to be considered.

Government incentives and grants for new homes

There are several different grants, concessions and incentives for building a new home in Melbourne.

Stamp duty concessions

If you are a first homebuyer, there are stamp duty concessions and exemptions available. To qualify, for an exemption, you need to be buying a home or vacant land valued at less than $600,000.

Concessional rates apply to land and properties valued between $600,000 and $750,000.

First Home Owner Grant

Eligible first home buyers who buy or build a new home valued up to $750,000 can received a First Home Owner Grant of $10,000.