What you need to know before starting your building journey

What are the things that impact the cost of your build?

When building a house there are many factors that will add to your cost.

The type of land you purchase can affect how much it will cost you to build. If your land has a poor soil classification, lots of trees and large slope this will add $$ to your overall build cost.

The size of your home will determine how much it will cost you to build, more specifically square meterage. With a bigger house your overall cost will go up on a multiplier effect. A bigger house means more materials are used; you will have more labour to put the materials in place.

The type of material you decide to use will impact the cost of your house. As an example, you will always pay a premium on a steel frame house as apposed to the traditional timber frame house. This is consistent throughout the entire house. If you decide on solid timber flooring as opposed to tiles you will pay a premium.

If you decide to build a high set house it will be more expensive. High set homes offer a greater level of space and more privacy with bedrooms typically upstairs; however, they will always be more expensive than a single-story home.

Who will be building your house? The builder you select is a very important to how much you will pay for your home. Unfortunately, it’s not always clear when researching builders on how much it will cost. You need to be going through the inclusions to understand clearly what you are getting.

Choosing a builder is an important decision


The greatest cost for a building is generally labour, its important that when designing your house, you understand items that require specialised skills to install will add to your cost to build. As an example, small mosaic tiles will take the tiler longer to install then large floor tiles.

Cost per square meter?

Cost per square meter is a unit of measure used commonly in the building industry. This is essentially used to break down an average cost for a home per square meter.

Total cost of House $350,000 divided by the total area 250sqm = $1,400 per square meter


Its important to understand that cost per square meter has its limitations. As an example, the sqm cost for an empty room will always be lower than a kitchen. Therefore, when reviewing cost per square meter you must compare like for like houses with the same number of bedrooms, bathrooms and kitchens.

 What is Provisional sum?

A provisional sum is used by builders at the contract stage. This is an estimated cost because the builder doesn’t know exactly how much an aspect of the build will cost. The provisional costs are generally to do with site cost because the builder won’t know if there are things like rock under the soil until they start excavation. Most builders will use a level of integrity with provisional sums however there are some that may lure people in with a low-price contract and have many provisional sums. Then once the client has committed financially all the provisional sums add up to a huge amount.

 What is a prim cost?

 Prime cost is an amount allocated for an item that the builder cannot price because there isn’t enough clarity on a brand, model and style etc. Taps are a great example of prime cost.  At the contract stage the builder might allocate $1,500 for taps in the bathroom, as the build project gets to the fit-out section the builder might advise that the taps are actually going to cost $2,000 which means that the balance has to be contributed by the home owner.

The best way to avoid falling into this trap is always be specific with your requirements and look out for prime cost amounts on the contract. If you haven’t been specific the builder will only apply a nominal amount for items. Most builders apply a level of integrity to this space however some use the prime cost to potentially increase their margins.

What is a fixed price building contract?

 According to Master builder’s https://www.mbawa.com/fixed-price-contracts/  association a fixed price building contact is the most common form of domestic building agreement.

As the name suggests a fixed price building contract is an agreement where the builder agrees to complete the work at a fixed amount. This provided assurance to the homeowner of costs.

A builder will generally add a premium to factor for potential risk of the job, they will also have some provisional sums for items that they cannot price at early stages.


Case study on an actual house we helped with:

This property is a 3-bedroom 2-bathroom brick veneer single level home with a relatively simple design.  The block of land is in the south of Brisbane and fortunately there weren’t any major issues with the soil test. There was an issue with the wind rating which added an additional $2,230 to the total cost.

The builder outlined the below additional works for increase in wind rating:

  • Additional frame tie-downs to suit higher lift pressure
  • Additional bracing panels to be supplied and installed
  • Additional roof sheeting screws
  • Change to window glazing
  • Change to wall frame and trusses

The overall cost for the project was at $250,000 with a basic level of inclusions. The price is an actual move in ready price with all inclusions. This equates to approximately $1250/square meter. You will notice that this overall price per sqm is lower than the BMT table below. The reason is we have builders compete for your business and the result is the client gets the best deal possible.

This is an example of a Hampton style 4-bedroom 2.5-bathroom high set home with a pool, the house was built on an inner-city Brisbane block. Most of the blocks available in the inner Brisbane city (within 10km radius) will be knock down rebuild splitter blocks. This brings with it challenges with soil and this project was no exceptions.

There was an additional $30,000 in site cost which put the total cost for the project at $410,000. The inclusions on this property were at a medium to high level. The per square meter cost for this project is at $1,673. You will notice that this project was substantially cheaper than the BMT average of $2,316. This is due to the competition we create with the builders.


Let’s look at steps you need to take in building.

Step 1


The first step of your building journey must start off with speaking to your bank or mortgage broker. This will allow you to understand what your budget is.

Step 2

Know exactly what you want, now this isn’t just specific to what type of house you want but also to the neighbourhood you wish to live in. Looking at the land first will prevent falling into a trap of selecting a design that might not fit the land you have selected. You should leverage a building broker at this stage to help mitigate any problems with finding a block of land and start your journey to find a builder.


As a homeowner you want to also understand what your house requirements are, a good question to ask yourself is: What are the things I like or dislike in my current home. This will allow you to create a list of things for your new home. At this stage you should also go to Display home to get inspiration from a design perspective.

Step 3

Research builders

This is a crucial stage of your building journey; you need to understand what your builder will be able to deliver. Things to look out for are their folio of homes they have completed, their references. Its as important to select a builder based on their ability to build a good house vs if you get along with them. The building journey is generally between 6-12months and if you must deal with a builder that you don’t get along with it may feel like a lot longer.

Your building broker will be able to help by doing the leg work for you, they have industry insights and are able to find the right builder for your project.

Step 4

Get a detailed quote

Comparing quotes between the builders is important to understand what you are getting. As part of the quote you will also receive a standard list of inclusions/specifications. This document is an itemised list of things that will form part of your home.

 How do Variations to fixed price building contract impact your budget?

Once a fixed price building contract has been executed by you and the builder any further changes to the contract will need to be through a variation. According to QBCC not putting things in writing is one of the main causes of building disputes. Variations need to be signed by both parties before any works can be completed. If your loan has already been approved based on your fixed price building contract than any additional cost through variations will need to be covered by the owners.

If there are major variations to your project this could impact your budget.


Summary


All the above factors play a part in determining how much it will cost to build a house, according to Rider Levett Bucknall Riders Digest 2019 Melbourne, Australia Edition the range is between $1,800 – 4,000. Below is a snap shot from BMT- quantity surveyors who have broken it down further per house.

To get the best indication on your specific type of home, speak to your building broker who will be able to asses your requirements and give you an overview of how much it will cost to build your home.