Article – Building Costs

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Building costs aren’t getting any cheaper, despite the slowdown in the economy. In fact a number of the volume project home builders are going out of business, for years they have survived on very small margins which are only possible when there is a large turnover of projects and then only by screwing down the wages or contracts of the sub contractors & trades. Now that the housing industry is in a slump there is not the volume that used to keep all of these builders and trades ticking along on low margins. There has to be a balance of cost for building – the cheap guys can’t maintain low prices when the volume is going down, the expensive guys can’t maintain exorbitant prices when people are hanging onto their money. The upshot is that large project homes are becoming less viable from a cost point of view, not to mention the poor quality of design or poor quality of finishes and inclusions.

Where does that leave the average person wanting to build a house they’re proud to call home? Smaller and cleverer is better, perhaps the McMansions are no longer viable from a cost perspective alone.

So what does the average home cost to build? The age old question with no one answer. There are numerous estimating tools and quantity surveyors on the web with just as many different answers. One company I looked at with an online building cost calculator used in feasibility studies mostly for developers had a range from about $1,000 / square metre for lower end quality and fixtures to $4,000 / square metre for higher end quality and fixtures. Well that’s about as useful as screen doors on a submarine, where does that leave you as a potential home owner? It really comes down to the builder you choose, the market forces at that time, the finishes, fittings and fixtures you or your architect choose and of course the size and complexity of the design.

Of course if you owner build the costs can be kept even lower than $1,000 / square metre, if you choose a quality builder and go with gold plated everything and the latest travertine direct from Italy then the cost can escalate infinitely, perhaps over the $4,000 / square metre mark.

Think about paying thousands of dollars for every square metre of building. If you had the opportunity to save even 10 square metres in your home through better considered design layouts, minimising wasted space and unnecessary circulation space, you could potentially save $10,000 to $40,000. This money could be used to buy better quality finishes, furniture, fittings or it may mean the difference between your project being economically feasible. Yes, a bit of spaciousness is nice, who wants to feel closed in, but is that extra 10 square metres or more in a house really worth the cost if it’s not adding to your enjoyment of life?

Clever design can make a space feel bigger without adding the extra square metres and therefore the extra cost. One of the most important things which will be elaborated on in future editions of this newsletter is natural light and connection to the outdoors. this is far more valuable in terms of spaciousness that an extra couple of square metres.

If you want to know a more realistic price for your future home instead of somewhere in the range of $1,000 to $4,000 per square metre, the best way is to speak to a number of builders in your area. You have the option with them of a rough estimate based on a basic floor plan and some 3d images or a fixed price quote based on a set of construction drawings.

With the rough estimate, the builder will use previous projects they have completed as a basis for them to calculate a square metre price. This will generally be within the ballpark of the actual build cost, although you would have to expect some variance when it come to them actually quoting the job properly. The advantage of this would be a fairly quick turnaround time and the builders would not be too annoyed about doing it this way. You could approach any number of builders in your area to do this for your home design.

With an accurate fixed price quote, the builder will send all of the drawings out to sub contractors and suppliers and will take quantities of materials, get the latest pricing and collate an accurate spreadsheet of all the costs, right down to the nails and screws. They would need to know the engineering details of any steel framing, timber beams, concrete slabs and footing etc. The price they come up with could then form the basis of an offer to build the house for that fixed cost. The advantage of this is that there should be minimal variance from the quoted price (unless you go and make changes). The downside (and I know this from experience) is that it takes an awful lot of unpaid work for a builder to put together a proper quote like this, potentially costing the builder and all of their subcontractors and suppliers $1,000 to $4,000 or even more in time and the turnaround time is often drawn out while they wait for everything to come back into them. Of course most builders will provide a fixed price quote if you ask them because without getting quotes out there they won’t get any work.

So if you’re just shopping around, kicking tires or comparing rates, it’s probably better not to abuse the good will and hope of builders, be up front and tell them that you’re probably just after a rough estimate at this stage and if it all works out in terms of feasibility then you are likely to come back later for a fixed price accurate quote.

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