When you build a new home the base price that builders show on their websites does not determine how much your specific home will cost to be fully finished. If you are looking for this service, you need to shop for “turn-key” packages. In most cases you will be asked to pay for your home in accordance with a payment schedule. Generally, a home in Perth costs about $800-$1,250 per sqm as a rough guide if that’s what you’re looking for. However, if you are building and want a better idea of how much is needed to be budgeted, you must consider these unaccounted factors into your budget before you sign your contract to build your new home. I have split these into four components: site costs, pre-start costs, variations and finishing costs and will explain them in detail after quickly talking about provision sums and prime costs.
Provisional Sums and Prime Costs
Before I get into costs, the difference between provisional sums (PS) and prime cost (PC) items must be explained. These are terms that are seen throughout a building contract and generally cause misunderstanding.
A provisional sum is an estimated amount of money by the builder as to what a certain task, material or service will cost. It is integrated into the initial contract because at the time of providing the contract, they could not be precisely costed. In most cases, builders will use provisional sums for the site works. For example, a site may look relatively flat and clear but on preparations to lay the slab they may find a lot of rock which needs to be removed. This will result in you having to pay an additional sum on top of the initial contract price.
Prime cost items are items which are subject to change at pre-start. They include things such as tiles, doors and taps. An estimated amount is provided to the client at the time of signing the contract. Depending on the specification of the finishes the builder is supplying initially, these prime costs items may cost you additional money or save you some money if you change them at your pre-start meeting.
I suggest having a buffer amount in your budget to account for provisional sum and prime cost item changes within your building contract.
Site costs are expenses to prepare your block of land for the build. These are usually completed by your builder and in most cases, charged on top of the build price and not on the base price. However, you can get a site survey done before talking with a builder. Site costs for an average block in Perth are usually around the $14,000 – $20,000 mark. These include:
- Retaining walls
- Site survey
- Soil test if needed
- Site clearance (trees, roots, bushes)
- Service connection (water, sewer, power, gas)
Pre-Start Meeting Costs
The pre-start meeting is at the stage when your house plans are finalised, approved by council and you are ready to make important choices about the colours and style of fittings and materials. Under the Home Building Contracts Act (1991) the builder must account for these costs in the contract. Although these prime costs are already in place by the builder, in base contract packages they are usually the cheapest materials, fittings and fixtures to be supplied and some of these you might want to change. This incurs an extra cost of the difference of the item prices. Most builders have specific suppliers for their materials such as tiles and fixtures. They will usually provide you a book to make and view these selections before you actually go to the final pre-start meeting.
As a general guide, allow about an extra 5% of your contract price for pre-start. This is obviously dependent on how much you change, if anything at all, and I have included some items below that could catch you out in a pre-start meeting.
Electrical Changes Costs
One of the biggest costs in prestart is if you decide to change your lighting layout from what has been initially drawn. This all depends on what your contract specification allows for. For example, if it only allows for one standard light per room but you want to have multiple downlights, this extra cost can add up quite quickly.
Roof Material Costs
Be sure to make note of what allowances for roof coverings your builder has given you initially because changing from tile to Colorbond, or vice versa, might be costly.
Tiling is often a complaint by clients, mainly because they don’t understand how the builder has come up with the price for the changes from the initial contract. In your contract there will be an allowance for a tiling amount per sqm and a certain tile size. Let’s say that you decide to change the tile size to a larger one with the same sqm rate cost. This will mean extra tiles will need to be bought and cut to fit in the same area that the smaller ones would have without cutting. In addition, the difference between rectified and non-rectified tiles can change the labour cost per sqm. This is because non-rectified tiles are much harder to lay flat without a noticeable level difference between each tile.
Fixtures and Fittings Costs
Let’s say you decide that you want fancy, nonstandard taps and shower heads in your bathrooms. These change the price dramatically compared to the original contract price which includes the builder’s default mass bought range. This is because the builder gets quite large discounts on those items and very small discounts on your one-of taps. Additionally, labour costs may increase if the item is more difficult to install.
Kitchen Pre-Start Costs
Kitchen bench tops, cupboards and overhead cupboard changes can easily add up depending on the quality of the item you are going for and what was in your initial specification laid out in the contract.
Variations to A Contract
Variations are changes to the contract you have signed initially or after pre-start. Variation costs are costs you want to avoid like the plague. Builders usually have a mark-up of about 20%-25% on variations. On top of this, builders usually charge a variation fee of $250 each. These fees should be set out in your contract, so be aware of them before signing your document. Variations should be in writing setting out the terms and should be agreed upon by all parties.
An example of a variation can be something big, like adding on an extra room, or something small, like changing the grout colour of the tiling. Unfortunately, variations tend to be a cause of argument between builder and client quite often. An example of this would be if the builder accepts a verbal variation but when charging, the client disagrees to pay the full amount or a portion of what the builder is charging.
Finishing your Home Costs
If you haven’t chosen with your builder a “turn-key” package, there will be additional costs to get your home complete. You will want to budget about 10%-20% of the final house price to finish the home. Finishing items include things such as carpet, paint, landscaping, fencing, reticulation, air conditioning, paving and a driveway if needed. I have added a table below showing some items that you should be aware of and very rough estimates of costs next to them. Please note that each house will differ and this cost may vary significantly.
|Exposed Aggregate Concrete||80||m²||90||7200|
|Wall & Ceiling Painting||550||m²||10||5500|
|Swimming Pool Fence||20||m²||180||3600|
Average Costs Of Building A House
The average cost to build a home in Australia is growing in most states year on year. According to Housing Industry Association (HIA) report Window into Housing 2018, the average cost to build a home in 2007 excluding land costs was $232,183 and in 2017 was $306,886 which equates to a 32% change over the last decade.
|Description||Unit||2007||2012||2017||change over decade|
|Avg. size of new house||m²||255||251||257||0.80%|
|Avg. cost building new home||$||232,183||259,321||306,885||32.20%|
|Median land price||$||182291||216,083||298,865||63.90%|
|Median land size||m²||550||452||420||-23.60%|
To summarise what was said in this article, a subjective guide to give you an idea of some pricings to build and new home can be:
- $800-$1,250 per sqm for a home builder to build your home
- $14,000 to $20,000 for site works
- 5% to 10% of contract price for prestart
- 10% to 20% to finish your home
- $200,000 to $300,000 for land
Thank you for reading. If you have any questions leave a comment or try get in touch with me via email.