The cost to build a house: Working out your home build budget

What is the cost to build a house? This is one of the first questions homeowners ask when looking into building a home. If you’ve never built a home before or are planning to build a one-of-a-kind custom built home, it’s an important question to ask.

However, it’s not a simple question to answer.

Why?

Because there are many different elements and factors that can impact your home build budget. Not only will what you build determine the cost, but where you build it, how you build it, and the timing of your home build will also play a role in your overall costs.

While we know you are here to find out the real costs and dollar figures of building a house, unfortunately, it’s not that straightforward. All builds are completely different. However, there is loads of information we can provide to help you ensure you're covering all the building elements in your budget.

Stick around to learn everything you need to budget for when working out your custom home build. This is the best way to get an accurate overview of the costs to build a house, ensuring every dollar is well spent.

The starting point: Setting your budget

Before you begin to plan your custom build and work out the final cost to build a house, you should clearly assess your finances and the budget you’re prepared to allocate to your home build. This helps set expectations and guides your decisions for your home moving forward. To set your budget, you should:

• Assess Your Current Financial Position: Take a good look at your savings, income, and financing options. A financial assessment will show you how much you can realistically afford to spend without overextending yourself.
• Get Qualified Financial Advice: If you plan to finance your build, it’s best to consult a mortgage broker to help you determine how much you can borrow and what the best loan structure will be. A construction loan is a popular choice for new home builds. Speaking to a broker will give you a realistic idea of how much money you have to work with and will help define the limits of your project.

Consulting an accountant or financial adviser is also a good idea, particularly if your custom home build is part of a larger long-term plan.

Once your financial position is clear and you’re confident about how much you can spend on your home, you can dive into the details of the actual house build to allocate your funds appropriately.

The cost to build a house: Where do I need to allocate my money?

Now that you know how much you can afford to spend, you can begin to work out where your money should go. While there are plenty of exciting aspects of building a custom home, such as selecting flooring, kitchen cabinetry, and lighting choices, there are also necessary but less exciting components, like council fees and earthmoving costs.

To make it easier, we’ve broken down the cost of building a home into several main categories. This should help you allocate your funds more effectively.

1. Land purchase

If you haven’t secured land for your custom home build, this will be the first thing to budget for. The foundation of your home is, quite literally, the land it sits on, and the cost of land can vary considerably depending on the location, size, and features on the block. If you’ve already purchased land, great! If not, consider the following:

• Location: Where is the land located in proximity to amenities, schools, and transport? This will not only impact the cost of the land but also your life when living in your home.
• Size: What size block of land will you need for the home you want, including outdoor living? Naturally, larger blocks cost more and may increase building costs.
• Elements of the Block: Is the land flat or sloped? Will you need to clear trees or add retaining walls? These factors can significantly influence site preparation costs.

2. Design and architecture

Another area to allocate funds is the design of your new home. Your home’s design is the blueprint for everything to come, and an architect or building designer will usually require upfront payment to design your home and draft construction plans.

For custom home builds, finding the right architect, designer, and builder is important to ensure everything you want in your home is included and aligns with your budget. It’s highly recommended to engage your builder early in the design process. Finding a builder who can work alongside your architect or offers an in-house design-and-construct service is the optimal scenario.

3. Permits and regulations

Building a custom home involves navigating local regulations and securing necessary building permits. Each city or council has its own regulations and requirements, assessing your building application against their guidelines. Your builder and building certifier will facilitate the applications for your new home build but you still need to allow costs for them. For permits and regulations, budget for:

• Lodgement Fees: Mandatory fees that vary depending on location and build type.
• Inspection Fees: The council will require inspections throughout the build and a certifier will need to be engaged to complete all inspections and sign off on the home upon completion.
• Relaxation Fees: If your home build doesn't comply with standard regulations or specific block regulations, you may need to submit a relaxation request.

These costs may seem small compared to the rest of your budget, but they can add up quickly if overlooked.

4. Utilities and connections

If your land isn’t connected to utilities, budget for this as well. Running water, electricity, and gas lines to your property may require additional work, depending on the site's distance from existing infrastructure. Consider:

• Water and Sewage: Will your home connect to town water and sewage, or require a septic system?
• Power: Running electricity to the site is essential and can be costly depending on distance and complexity.
• Internet Connection: For a connected home, you’ll need an NBN or internet connection.

In established areas, utilities and services will likely be available to connect to on the street. For more rural locations, this may not be the case.

5. Construction costs

Construction costs are where the bulk of your budget will go. These costs depend on the size, complexity, and level of finishes you choose. For construction costs, you should consider:

• Materials: From foundations to roofing, the materials you select will impact your budget. High-end finishes like natural stone or hardwood floors will increase costs, while more standard options will also reflect in your budget by saving you money. Only you will know what the best options are for your home but it’s important to select materials that are both suitable and durable.
• Labour: Your builder and their team will be the lifeblood of your project. Labour costs will depend on the build's complexity, and while it may sometimes appear that the labour costs are a lot, having a good quality builder and trades working on your home is worth the investment.

6. Interior Finishes

The interior of your home is where your personality shines, but it's also an area where costs can quickly escalate. From flooring and lighting to appliances and fittings, there’s a lot to consider. To keep your budget under control:

• Set priorities: Invest in key areas like the kitchen and bathrooms, where quality matters most.
• Stick to your style: Choose finishes that align with your overall vision and budget, and avoid splurging on fleeting trends. Classic homes will never go out of style.

7. Landscaping, outdoor areas and extra features

Don’t forget to budget for landscaping and other elements that will make your house a home. Whether it’s a simple lawn and garden or a full outdoor entertaining area, these features add to your home’s appeal and need to be factored into the budget. Plan for pathways, decks, fencing, and a driveway.

Remember to include items like a clothesline, letterbox, solar panels, water tanks, and any other sustainability features you wish to incorporate. If you want to install a pool it might be more cost effective to complete this first while access to the pool area is not restricted by a house.

Allow for the unexpected in your new home construction costs

No matter how well you plan, unexpected costs can arise. To cover these, include a contingency fund in your budget… typically 10-15% of the total build cost. This buffer will cover any surprises without derailing your project.

You may also want to budget for new furniture and furnishings for your new home.

Work Closely with Your Builder to Keep Your Budget Under Control

A strong partnership with your builder is crucial during the building process. Working closely with your builder will also ensure your budget remains in check. Here’s how to ensure things run smoothly:

• Be Clear About Your Budget: Let your builder know your financial limits from the start. A good builder will work with you to maximise your home's potential without compromising quality.
• Regular Updates: Stay involved in the process with regular check-ins. This will help you stay on top of any cost changes and avoid surprises.
• Flexibility: While it’s important to have a plan, be prepared to make adjustments along the way if your budget requires it.

Prior Planning Prevents Poor Performance, especially when it comes to new home build costs.

Working out the cost to build a house requires careful planning, realistic expectations, and flexibility. By understanding the key components—land, design, construction, and finishes—you can build a budget that balances creativity and practicality. Remember, a well-planned budget isn’t just about numbers; it’s about bringing your dream home to life in an achievable and rewarding way.

For help working out the cost to build your house and budgeting for your custom home build, give the team at Line and Form Custom Homes a call and we can walk you through the entire process.