According to recent research from the Australian construction industry,the typical cost of building a house in Melbourne ranges from $2,200 to $5,500 per square metre.
Cost to build a house in Melbourne?,
A standard house in Melbourne typically costs between $556,600 and $1,391,500 to build, based on an average size of 253sqm.
This estimate aligns with the observations of Rebeka Morgan, founder of BuildHer and a residential builder in the area.
She notes that, “Generally speaking, most Melbourne homes will range in cost from about $3,000 to $5,000 per square metre.”
However, she adds, “We occasionally see houses that can cost as much as $8,000 per square metre.”
Such prices usually indicate a premium build, which is not very common in the market.
If you are considering building a home in Melbourne, several factors can significantly influence the overall cost you incur.
Morgan explains that “when constructing a larger, premium home, expenses can increase rapidly, especially with high-end finishes and custom designs.”
Additionally, intricate details, such as bespoke joinery or specialty materials, can further contribute to rising costs.
Cost of building a house in Melbourne based on the number of bedrooms.
The number of bedrooms you select for your new house is a key factor influencing the overall construction cost.
This is primarily because most construction projects are priced on a “per square metre” basis, impacting total size.
Consequently, a home with more bedrooms will typically be larger, leading to higher costs overall.
However, according to Morgan, even the cost of building a four-bedroom home can vary significantly based on other factors.
She explains, “The total expense is not solely determined by the home’s size; it also depends on the finishes and details you select.”
For example, including custom joinery, premium materials, or specialty features like a bespoke kitchen or bathroom can greatly increase your budget.
Expense of constructing a 3-bedroom house in Melbourne.
Building a standard three-bedroom house of 175 square metres typically costs between $385,000 and $962,500.
However, if you aim to construct a premium home, the costs could reach as high as $1.4 million, based on Morgan’s estimates.
She explains, “The variation in cost mainly stems from the degree of customization and the quality of materials used.”
Moreover, premium homes usually feature high-end finishes, custom cabinetry, and bespoke design elements that significantly increase the overall price.
Cost of building a 2-bedroom house in Melbourne
The cost of constructing a standard two-bedroom house in Melbourne ranges from $264,000 to $660,000 for a 120sqm home.
This size is less than half that of the average new house in Melbourne.
However, Morgan points out that this size isn’t entirely unrealistic for a small home on an inner-city block.
She explains, “Smaller homes, particularly in inner-city areas, are becoming increasingly common as land availability declines.”
People are prioritizing location over size, making these homes more appealing.
“Even with fewer bedrooms, these homes can be costly to build due to elevated land prices,” Morgan adds.
Additionally, challenges such as material delivery and onsite work, along with demand for premium finishes, further drive up costs in smaller spaces.
Cost of building a 4-bedroom house in Melbourne
Building a four-bedroom house in Melbourne typically costs between $572,000 and $1,430,000.
This estimate is based on a home size of 260sqm, which is common for four-bedroom houses with two bathrooms.
Additionally, some four-bedroom homes may include two bathrooms and an ensuite, contributing to the typical size.
However, for a premium home of this size, costs could soar to as high as $2,080,000, according to Morgan’s calculations.
Cost of building a 5-bedroom house in Melbourne
Constructing a five-bedroom house in Melbourne typically costs between $660,000 and $1,650,000 for a standard 300sqm property.
However, if you decide to go for a premium build, costs could reach up to $2.4 million, according to Morgan.
She explains, “Luxury builds involve much more than just extra square metres; it’s about the craftsmanship level and quality of every feature.”
What is the cost of adding a second storey in Melbourne?
According to Morgan, adding a second storey can increase the construction cost by as much as $1,000 per square metre.
This increase occurs because a single-storey house requires a larger foundation and roof area.
However, including an additional storey complicates the building process significantly.
She explains, “Adding a second storey involves more complex construction elements, such as scaffolding, staircases, and extra external walls.”
“It’s not just about the materials; there’s also increased labor and coordination needed, which raises costs considerably.”
Generally, a second storey can add approximately 10% to 20% to overall construction expenses.
For example, if you’re building a single-storey four-bedroom, two-bathroom home in Melbourne for $800,000,
the cost for a two-storey version of the same size and materials would range from $880,000 to $960,000.
Is it more affordable to build or buy a house in Melbourne?
Building a house can occasionally be less expensive than purchasing one in Melbourne.
However, this situation depends on various factors that should be considered carefully.
These factors include location, design choices, and current market conditions.
The value of the land
According to one report, the average price of vacant land in Melbourne is $394,000.
However, in prestigious suburbs near the city centre, you will likely face significantly higher costs.
The cost of building
Clearly, the higher the construction expenses, the greater the total cost will be.
Transfer (stamp) duty
Victoria has some of the highest stamp duty rates in the country.
For example, purchasing a $1.5 million established home as your primary residence typically incurs a stamp duty of $82,500.
Since stamp duty is based on the purchase price, this can lead to substantial costs.
Additionally, the price of buying land is generally much lower than that of purchasing an established home.
Therefore, opting to buy land to build could result in significant savings overall.
Transfer duty concessions
However, you might qualify for a stamp duty concession or exemption if you are purchasing your first home.
To be eligible for an exemption, the home or vacant land must be valued at less than $600,000.
Concessional rates are applicable for properties valued between $600,000 and $750,000.
First Home Owner Grant
The First Home Owner Grant offers $10,000 to qualifying first home buyers who purchase or build a new home valued up to $750,000.
Other costs
You should also consider additional costs, including building and pest inspections.
Additionally, factor in the expenses for removalists and solicitors.
If you need to live elsewhere during construction, include the cost of renting another home as well.
What factors influence the cost of constructing a home in Melbourne?
The cost of constructing a home is typically impacted by six main factors.
1. The size of home
According to a Commsec report, the average size of a new property in Melbourne is 250.3sqm.
This size is larger than the average Australian home, which measures 195.8sqm.
Since larger homes require more materials, they generally come with higher costs.
2. Materials
This is where the true cost of building a home often becomes apparent.
Morgan explained, “While houses aren’t necessarily increasing much in size, they are becoming more customized.”
“Homeowners today are opting for higher-end materials, custom joinery, and specialty finishes, which significantly raise the overall cost.”
3. The site you’re building on
“Constructing on sloping or challenging sites can significantly increase costs due to excavation needs, retaining walls, and complex construction methods,” Morgan explained.
“You also need to consider soil quality and drainage, as these factors can affect the foundation work required.”
4. Any delays
Weather and other delays can greatly influence the progress of a building project and lead to unexpected costs.
These delays can disrupt scheduling, making it more challenging to coordinate trades efficiently and extending project timelines.
Morgan stated, “Delays aren’t inevitable, but having a realistic timeframe and understanding the project process is essential.”
She added, “Keeping the builder’s schedule on track and proactively ordering materials can prevent many headaches and save costs later on.”
5. How complex your design is
Project homes are generally more affordable because builders take advantage of economies of scale.
They order materials in bulk and replicate the same design multiple times, leading to cost savings.
Morgan noted, “Choosing a more complex or bespoke design increases costs because you’re hiring specialists and using unique materials.”
She added, “While custom homes offer personalization, they also incur additional expenses from the design phase all the way through construction.”
6. Costs outside of the build itself
“A lot of people overlook external costs when budgeting for a build,” Morgan observed.
“Expenses such as driveway paving, garden landscaping, and fencing can accumulate quickly.
Therefore, it’s crucial to plan for these costs right from the beginning.”
