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Buying or Building a House, which is Cheaper?

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Is it Cheaper to Buy or Build a House

When you want to have a new house – one of the first things you need to think about is how you’re going to do it. Are you building it? Or are you just buying a new one? Which is the better option for you?

Generally, it is cheaper to build a house rather than buy a new one. But there are also some drawbacks to building your house. What’s the most evident is the long, arduous process that requires so much from you – doing project management, some research, and ensuring that you’ll be there from the start till the end of the project. Sounds like a lot, ‘right? But the upside of it all is your freedom to design a home that would be suitable to you and your family’s lifestyle and needs. Also, many will get complete satisfaction of fulfilling a project till they see the outcome, which is a rather good reason to go for building a house as well.

How do you get the AVERAGE House Cost in terms of the NUMBER of rooms?

The building cost is affected by many factors, but the Australian Bureau of Statistics or ABS made a report that the average cost is roughly $1,393.55 per sqm. Take note though that this amount excludes the following: planning permits, design, cost blow-outs, and site works.

Per information at the ABS Buildings Approval, the typical or average house in Australia is 229.8 sqm, which means that the build portion’s cost is pegged at $320,238.

But Alvic Samson, a director at Alvic and Partners Architects, stated that the cost of building one architecturally designed house starts from a minimum of $3,000 per sqm, right up to $5,500 per sqm, or $60,000 per Australian house.

He further added that it is difficult to compare the costs of an architecturally designed home to one that’s done by a volume builder for as little as $1,500 per sqm.

“Architecturally-designed homes are novelty homes reflecting one’s personal view of space and luxury. And when it comes to luxury, oftentimes, the sky is the limit.”

That’s something to think about!

Check out our “Building Cost Calculator

Home Design Fees

Design fees also need to be taken into consideration along with the house-building expenses. It’s best to seek a professional to help you in designing your dream home, either a building designer or an architect. The architects normally charge from 8% to 5% of the total building costs to start designing your house plans. The average rate for residential projects is typically at 10%.

Such house plans are required to be submitted for approval by the council. This council approval process can be anywhere from 30 days to 100 days, depending on which local council you’re in. Your architect or your builder can assist to guarantee that your submitted documents pass all the relevant criteria to avoid delays.

Going for a Builder with Extra Costs Instead of a Project Home

Some choose to select a custom design and a builder instead of building a home project via a bigger company. This may be influenced by the requirement (too many block slopes) or personal preference (prefers a custom design). Take note though that there are additional costs to be incurred when you go for the builder vs. a project home.

Check the following:

  • Home design – You will need to pay for the home design and this doesn’t come out cheaper since you are hiring an architect.
  • Materials – For project homes, they usually have the materials in bulk plus they can work with cheaper materials. For a custom-build project, there are likely additional costs for materials.
  • Project Manager – A project manager is vital to manage the build.
  • Labor – Builders and building companies make good money on the markups they charge vs. labor. You may have to pay more in labor costs if you go for a builder who hires expensive sub-contractors.
  • Plumbing – These are significant factors to take into account if you’re having a new home. But they vary and will depend on the number of fixtures that will require plumbing and the size of your property. You should look for a reputable and competent plumber to discuss this area if you want to get a precise estimate of what’s up ahead for you. The plumber is skilled to evaluate your home plans and can give you an accurate idea of what and how much are the plumbing costs to anticipate for a new build, such as yours.

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Factors Affecting Home Building Costs

Aside from the size of your home, other variables that will have an impact on your home building’s final cost include the following:

  • Property’s slope as well as site access;
  • Whether a custom-built or volume-built home project;
  • Type of construction, in terms of cost: timber frame, the costlier brick veneer, or the high-priced double skin brick;
  • How many levels (multi-level buildings are priced more);
  • The pricing structure of the individual builder;
  • Options for various materials, accessories, and finishes.

Build Cost of a 3-Bedroom House

*For a 3-bedroom dwelling, weatherboard type on a level block with low-cost/budget materials = cost is approximately $1,300 per square metre.

*For a 3-bedroom project home of full brick, single-level type, on a level block with mid-range to high-end materials and finishes = cost is somewhere from $1,600 to $1,900/sq. m.

Build Cost of a 4-Bedroom House

*For a 4-bedroom project home, made of brick veneer, and single-level, with mid-range materials and finishes on a level block= cost is approximately $2,400 per square metre.

*For a 4-bedroom full brick, two-level home on a level block designed by an architect; making use of the most superior materials and finishes = cost is around $3,900+ per square metre.

Build Cost of a 5-Bedroom and Second Storey House

*For an architect-designed 5-bedroom home = expected cost is from $4,300 per square meter and up

*For the second-storey extension costs, the charges will go from as low as $1,850 to as high as $3,300 per square meter based on the quality and price of the construction materials and inclusions.

These numbers are just rough estimates – as building costs can vary significantly based on one’s location, project design, and level of the fit-outs.

Prices and costs in this article are for reference purposes only. They differ locally and are subject to several market factors.

Questions to Ask Your Builder

Building a house project takes so much effort so you need to be sure to hire the right builder to do the project. Some questions you should ask:

  • Do you have a license to build a house?
  • Do you have experience with the job? How long have you been building houses?
  • When can you start the project? What’s the timeline for the job?
  • Can you provide a detailed written quotation?
  • Do you have some people as references whom I can contact?
  • Do you have public liability and professional indemnity insurance?

Getting Quotations from House Builders

Once you’ve made your plans and have a solid idea of the costs of materials for your house project, begin to ask for quotes from several local builders for comparison.

It is also a MUST to sign a contract with your builder. This is a legal requirement and the goal is to make sure both parties are protected. What should the contract define?

Here are the details which should be included in your contract:

  • Scope of works;
  • Total contract price;
  • Total cost of the project;
  • Timeframe for work completion;
  • Schedule and timelines for payments;
  • How to resolve disputes? What happens if there is one?
  • Each contract has its advantages and disadvantages. Decide which contract will be suitable for your situation – will it be a standard contract, a cost-plus contract, or a fixed/lump sum one?

Key Takeaways

Building a house might be a better option since it can save you some cash as compared to buying a new house. But be ready for a lot of work which will take up your time as well. You will have to plan, meet with your architect or builder, handle some errands, do some budgeting (you can lower the costs by choosing cheaper materials and finishes), and see to it that the project is completed from Day 1 to the last day. Plus, you have to be patient in organising, comparing, managing, and waiting for all the services needed to make your dream house a reality. Remember the tips we’ve shared here to help you out as you embark on this ‘building a house’ journey. After all, this much awaited home is a reflection of your own needs, personality, lifestyle, and your long-time dreams. Your efforts will be rewarded once you see the outcome, live in it, and enjoy your very own built home.

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