Cost to Build a House in Melbourne

July 25, 2022
How Long After Buying Land Do You Have to Build?

Although house prices in Australia over the last ten years have seen consistent growth, certain markets took a dip during the pandemic with Melbourne’s property scene being one of the hardest-hit ones.

Following a robust growth period in 2020 and 2021, housing values in Melbourne have now experienced a decline of 9.1% from their peak in February 2022.

People can easily buy a house for sale in Melbourne, but building a house to one’s own standards and preferences is a more cost-effective option, both upfront and in the long-term.

The average cost of building a home in Melbourne rounds up to $350,000, though this can vary greatly depending on several factors, including the house’s size, quality, and design.

Costs of building a house in Melbourne have increased by around 15% since last year, with the average cost per square metre at $2000 to $4300. Here are the costs that go into building a house.

Things to Consider Before Building

Before we delve deeper into the nitty-gritty of building houses, let’s talk about some things that homeowners and investors should consider before they even think of lifting a hammer.

Investment Opportunity

Buying and building property isn’t just a placement solution. It’s an investment if you play your cards right. When making your decisions, think of it from two perspectives: first as the homeowner yourself, and second as a prospective homeowner interested in the property down the road.


Cost to Build a House in Melbourne

Apart from the usual building costs, your budget will also be eaten up by the cost of the lot in which you’ll build your home, and its location mainly dictates that price. Search for the best Melbourne suburbs to live in based on your needs and budget. You can also look for cheap land for sale in Melbourne then work from there.

Supply Costs

Housing prices aren’t the only things that fluctuate. Even the cost of supplies can change regularly and you have to consider these spikes and dips in your timeline to maximise your budget.

The Average Cost of Building a House in Melbourne

In 2022, the average cost of building a house in Australia is around $500,000. In Melbourne, the average is $350,000 (though more affluent suburbs can see prices upwards of $1,000,000), with the cost going up to $2000 to $4300 per square metre. 

Cost to Build a House in Melbourne

Factors That Affect Building Costs

The price of building houses is affected by several factors, mostly relating to labour and materials. Here’s what you need to know.

Size of the Build

The average size of Australian homes is 200 square metres, and the average house size in Melbourne is 3 bedrooms.

But new builds start bigger at 240 square metres. A larger build requires more materials and specialised equipment and demands more labour. It may also take longer to finish, unless a larger team is employed to work on the project.

Quality of Materials

The higher the quality of your build materials, the higher the cost—and this isn’t just because the raw materials are more expensive from the get-go. Typically, better materials also require higher finishing and craftsmanship, which can lead to higher labour costs. If you’re thinking about skimping on quality to save a quick buck, you may want to reconsider. Using cheap materials may be more expensive later on when you’ll have to deal with repairs and replacements.

Luxury materials, technology (such as smart systems), and energy-efficient equipment can also add up to your bill and aren’t usually included in initial cost projections.


Cost to Build a House in Melbourne

Complex architectural designs come at a premium since they’re harder to conceive and assemble. Additionally, concepts like voids, split levels, open plans, etc. may also be more costly building-wise.


Suppliers and builders need good access to delivery, storage, and use of machinery. Lots in tight sites, sloping areas, or near a water source can be difficult to get to and can incur extra charges to ensure proper support and protection.

Time Frame

Tighter time frames to finish a build will require more capable hands on deck. You can save by hiring a sole operator, but going that route would take significantly longer to complete the project.

Regulatory and Insurance Requirements 

When building a house in Melbourne, you have to comply with some regulatory requirements. For example, you may need a building permit before you can legally construct a house in the said area.

However, getting approval from regulatory agencies can cost a considerable amount of money. On the other hand, you may also need to consider the general insurance requirements for constructing a house. From the performance and payment bonds to the contractor’s liability insurance, all these may impact the overall building cost.

Is It Better to Build or Buy?

Deciding whether to build a house or buy a turn-key home depends largely on the buyer’s time, budget, and preferences. While it’s more cost-effective to build a home from the ground up, it takes a lot of time and effort.

Whether it is cheaper to build or buy a house depends on various factors such as location, market conditions, and individual preferences. Building a house gives you the flexibility to customize it to your specific needs but may involve higher upfront costs.

On the other hand, buying an existing house may provide more immediate availability but could require additional expenses for renovations or modifications. It is advisable to consider your budget, desired specifications, and consult with real estate professionals or builders to determine the most cost-effective option for your situation.

If you have a little more room in your budget, you may be better off looking for a ready-built home in your preferred Melbourne suburb.

In that case, you may need the services of one of the best conveyancers in the area to handle the legal aspect of buying a property. 

Essentially, a conveyancer refers to a professional who is well-versed in the laws surrounding property sales. They can also perform specific tasks on your behalf. For example, they can prepare the necessary documentation, research the property and certificate title, and calculate taxes.

More importantly, they check pertinent information affecting your property ownership and represent your interests when talking to a vendor or real estate agent. 

Therefore, having a conveyancer is necessary when buying a home in Melbourne. If you haven’t hired one yet, you can seek recommendations from your family and friends. If recommendations aren’t available, you can search online to obtain more information about conveyancers. 

Once you find the right conveyancer, it’s time to begin property hunting. You can look for one through Soho’s search page, or you can download the app to get the full experience of shortlisting your next home in Melbourne!

What is the cost of building a house in Victoria?

The cost of building a house in Victoria can vary depending on factors such as the size, design, quality of materials, and location. Naturally, the cost of land in Melbourne will be higher because it’s a capital city, whereas you might be able to find cheap land for sale in Victoria in rural regions. But you can still try ans find cheap land for sale in Melbourne if you’re on a budget.

It is recommended to consult with local builders or construction professionals to obtain accurate cost estimates tailored to your specific requirements. Factors such as labor, materials, permits, and site preparation contribute to the overall cost of building a house in Victoria.

How much does a townhouse cost to build?

To build a townhouse, costs can be estimated between $380,000 and $437,000 as a rough price range, considering that the average size of a townhouse is approximately 150 square meters

The cost of building a townhouse can vary based on several factors including location, size, design, materials, and finishes. It is challenging to provide an exact figure without specific details. Consulting with local builders and obtaining quotes based on your desired specifications is crucial to determine the cost of building a townhouse in your area.

Soho is your expert team in Australian real estate, offering an innovative platform for effortless property searches. With deep insights into buying, renting, and market trends, we guide you to make informed decisions, whether it's your first home or exploring new suburbs.
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