How Much Does it Cost to Build a House in Melbourne?


Are you considering building a house in Melbourne but unsure of the associated costs? While constructing a house can be an exciting and fulfilling experience, it's essential first to understand the expenses involved.

In this guide, we'll explain the factors contributing to the cost of building your house. From navigating local building regulations to choosing the right materials, we'll provide valuable insights to help you plan your budget effectively.

Understanding the Factors Affecting the Cost

Many elements influence the overall cost of building a house, and it’s essential to consider these factors when estimating your home's budget.  Here, we outline ten cost factors to help guide you with your planning.

1. The Size & Layout of Your Home

The size and layout of your home play a significant role in determining the overall cost. Larger homes typically require more materials and labour, resulting in higher expenses. Complex layouts with intricate designs may also require specialised skills and additional construction time.

2. Construction Materials

The choice of construction materials can significantly impact the house’s cost. There are a wide range of options, including brick, timber, concrete, and steel, with each material having unique characteristics and price points, so it's essential to consider both the aesthetic appeal and budget implications of each.

3. Location

The location of your house can greatly influence the cost. Factors such as land prices, accessibility, and local building regulations can vary from one area to another. Additionally, remote or difficult-to-access locations may incur higher transportation costs for construction materials and labour.

4. Labour Costs

Labour costs account for a significant portion of the overall expenses. The cost of hiring skilled tradespeople, such as carpenters, electricians, and plumbers, can vary depending on location and demand. Researching and obtaining multiple quotes from reputable contractors is essential to ensure fair pricing.

5. Site Preparation

Before construction can begin, it's essential to prepare the site. This process involves clearing the land, levelling the ground, and addressing any potential issues, such as poor soil quality or tree removal. The complexity of site preparation can impact the overall cost of building your house.

6. Design Complexity

The design and architectural features of your house can significantly impact the cost. Features like high ceilings, custom finishes, and unique architectural elements require specialised craftsmanship and may incur additional expenses.

7. Permits and Approvals

Before construction can begin, you may need permits and approvals from local authorities. These costs can vary depending on the size and complexity of your project. It's advisable to consult with a professional to ensure compliance with all relevant regulations.

8. Utilities and Infrastructure

These costs include water, sewer, electricity & gas connections.

9. The Economy

Economic factors such as inflation and interest rates can greatly affect construction costs.

10.   External Amenities

When building a new house, you may need to factor in the cost of external amenities such as driveways, landscaping, fencing, and outdoor entertainment areas.

The Hidden Costs of Building a House

Contingency & Unexpected Costs

It’s advisable to set up a contingency fund for unforeseen expenses during the construction process. This will provide you with a safety net in case of any unexpected delays, design changes, or site conditions. Other considerations may include:


If you decide to upgrade materials, fixtures, or finishes, these upgrades can add to your budget.

Land Surveys and Geotechnical Reports

Unforeseen survey or geotechnical requirements can incur extra costs, especially if unexpected soil conditions are discovered.

Temporary Housing:

If your construction timeline extends beyond your initial estimates, you may need to budget for temporary housing during the construction period.

In addition to incorporating a contingency fund, working with a knowledgeable builder is crucial. At First-Place, we prioritise maintaining continuous communication with you throughout the entire building process.

Tips for Managing Costs

Building a house can be a substantial financial commitment, but there are ways to manage costs effectively. Here are some tips to help you stay within your budget:

Plan and Research

Take the time to plan your project thoroughly and research various aspects such as materials, labour costs, and design options. This will help you make informed decisions and avoid costly surprises.

Explore Sustainable Options

Explore sustainable building materials and energy-efficient options. While they may have a higher upfront cost, they can lead to long-term savings through reduced energy consumption and maintenance. As of May 1, all new homes must adhere to the government's 7-Star Energy regulations. Maintaining a 7-Star energy rating in all our homes ensures they are more cost-effective for heating and cooling and more environmentally sustainable.

Obtain Multiple Quotes

Don't settle on the first quote you get.  Shop around and get quotes from multiple contractors and suppliers to ensure competitive pricing. Don't hesitate to negotiate or ask for discounts to save on costs.

Only Hire Professionals

Research the credentials of architects, designers and builders who can provide valuable advice and ensure the smooth execution of your project.

Identify Your Priorities

List your priorities and ‘must haves’ in your home. This way, you can stay focused and within your budget.

First Home-Owners Grant

In Victoria, the First Home Owner Grant (FHOG) for building your own home provides eligible first-time homebuyers with financial assistance. This grant aims to ease the financial burden by offering a one-time payment to help offset the costs associated with constructing a new home. If you plan to build a house valued at up to $750,000, you may be eligible for an FHOG of $10,000, so it’s worth taking advantage of. Check your eligibility here

The Actual Cost to Build a House (2023) - The Figures

So, you may be wondering how much it costs to build a house. According to the Australian Bureau of Statistics, the average cost of building a house in Melbourne is $327,000 - $473,000. This doesn't, however, take into account the recent labour shortages.

The cost of building a house is also influenced by factors such as the house's size, with larger structures requiring more materials, time, and labour. Material choices also play a role, as opting for high-end materials can increase costs, while using budget-friendly options can reduce expenses.

How Long Does it Take to Build a House?

The time it takes to build a house can vary significantly depending on various factors. These factors include the size and complexity of the house, construction method, labour and materials availability, and regulatory or permitting requirements.

On average, the construction of a single-family home can take anywhere from several months to over a year. It's important to consider the different construction phases, including site preparation, foundation work, framing, roofing, interior and exterior finishes, and final inspections. Delays can occur due to weather conditions, changes in design or scope, or unforeseen issues during construction.

Consult with local builders, contractors or construction professionals for a more accurate timeframe.

Is it Cheaper to Buy or Build a House in Melbourne?

Prospective homeowners often wonder about the costs of building a house compared to buying an existing property. And, while cost is a key factor in deciding whether to build or buy a home, there are many other considerations to take into account as well.

Cost of Building a New Home vs Cost of Buying a New Home


Building a house typically involves more upfront costs compared to buying an existing home. There are expenses such as purchasing the land, obtaining permits and approvals, and hiring architects and builders. These costs can vary greatly depending on the house's location, size, and design. Additionally, building a house from scratch allows for more customisation options, which can further increase the cost. However, building a new house often results in increased energy efficiency and modern features, potentially leading to lower utility bills over time.


Buying an existing home generally involves fewer upfront costs, with the purchase price being the main expense. Additional costs such as stamp duty and legal fees may apply, and prices can vary based on factors like location, size, age, and condition.

Other Considerations

Maintenance & Running Costs

Another factor to consider is the ongoing maintenance and running costs. When you build a new house, it is likely to be more energy-efficient and have modern features, which can result in lower utility bills in the long run. On the other hand, an older home may require more maintenance and repairs, which can add up over time.

Fluctuation of Materials & Labour Costs

Building materials and labour costs can fluctuate based on supply and demand. If the market is experiencing high demand for construction services, it could drive up the cost of building a new house. On the other hand, if there is a surplus of existing homes on the market, it could lead to lower prices for buyers.

Pros & Cons of Building vs Buying Your New Home

Pros of Building a New Home


You can design a home to your specifications.

Potential Cost Savings

Building might be cost-effective depending on the location and design choices.

Energy Efficiency

New homes are generally more energy efficient.

Modern Technology & Appliances

New homes are fitted with the latest technology and modern appliances.


Cons of Building A New Home

Time and Effort

Building can be time-consuming and requires active involvement in the construction process.  Ensure that you hire a builder who has clear communication and will keep you updated throughout the entire process.

Unforeseen Costs

Unexpected issues during construction can lead to additional expenses. Make sure you are aware of these and plan accordingly with a contingency fund.


Pros of Buying a New Home


Buying an existing home is quicker than building a home from scratch.  This may be a big drawcard for many people.

Established Neighbourhoods

Buying a home provides more location options.


Cons of Buying a New Home

Limited Customisation

Existing homes may require renovations to meet your preferences.

Maintenance Costs

Older homes may need repairs and maintenance.

To determine which option is more cost-effective, it's essential to research current real estate prices and construction costs in the desired area and consider your specific needs and preferences. Consulting with real estate professionals and builders can provide valuable insights based on your individual circumstances.

Building a house requires careful planning, research, and budgeting. By considering the factors influencing the cost and implementing effective cost-management strategies, you can bring your dream home to life within your desired budget. Remember to consult with professionals and obtain multiple quotes to ensure a successful and satisfying building experience.


Q: What is the average cost per square metre for building a home in Melbourne?

 A: Melbourne’s estimated average building costs per square metre are between $1,300 and $3,000.

Q: Are there government incentives or grants available to help offset the cost of building a home in Melbourne?

A: Yes, the Victorian government offers several grants for first-time home builders - click here to find out more

Q: How do I find an experienced builder?

A: Look for a builder with a solid reputation and a proven track record of successful projects. Consider their experience in constructing homes similar to what you have in mind. Online reviews, testimonials, and references from past clients can provide valuable insights into the builder's reliability and work quality.  You can check out First-Place credentials here.

Q: How long will it take to build my new home?

 A: While many factors determine the length of time to build your home, an estimate would be anywhere from 6 -18 months.  Contact one of our consultants for a more accurate timeframe.


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