Building a house in Australia cannot be drilled down into one simple price that you can use to calculate your overall costs. There are a lot of hidden extra costs when building a house and if you don’t know about them then your budget will quickly skyrocket out of control.
In this article I want to cover some of the costs you will experience when buying land and building a house. These are generally NEVER fixed prices, so it is always a good idea to speak to your builder or building company about exactly how much you should expect to pay.
For more information on the total costings of building a house (not just the hidden fees) please check out my post on How Much It Costs To Build A House or if you are looking for something smaller you can look at the costs of building a granny flat.
NOTE: I am not a financial advisor or professional accountant. Information in this article is for informational purposes only and should only be considered a very rough estimate. Always do your figures before investing and get professional advice.
1. Soil and Contour Tests (~$1,400-$2,000)
Before any builder or building company will give you a fixed quote for a build they will need to do a soil and contour test (2 separate tests) that can cost upwards of $1,400.
Soil Test – From what I know the surveyors come in and drill 3 holes in your property and analyse the soil. If you have rocky soil or any issues with your soil that makes it difficult to build then you will incur extra costs.
Contour Test – A contour test surveys the land and gives details as to the slope of the property. Builders need to adjust plans based on the slope of the property and if you buy a sloped block you are likely to incur extra costs.
2. BASIX (~$8,000-$10,000)
The NSW government requires new builds to comply with new regulations known as BASIX. This helps to improve the sustainability of our houses and make them more ‘green friendly’. This includes additions such as a water tank on your property.
Prices vary based on the quality of your land and your specific build.
3. Site Costs (~$10,000-~$70,000…average around $18,000)
This is likely to be the biggest hidden cost that you will incur when building your home, and unfortunately it has the largest variability. It will be based largely on your soil test and your contour test. The worse the soil and the larger the slope the larger the site costs.
If it is difficult to get to the site then this can also incur costs. If you have to remove lots of tree then this will also incur excess costs. If you need to build retaining walls or if you find some ancient tomb on your property then these all have extra costs.
Talk to your builder about what your cost expectations are for your block or the block you are looking to buy. For us we are looking to get a rough estimate before we buy so we can ensure site costs do not go over budget.
Not all building quotes include flooring in your house. They might be based simply a constructed house on the concrete slab. You will then have to decide on what flooring to have. This includes things like carpet, floorboards and tiles.
Make sure you speak to your builder about what kind of flooring you would like to get a quote. If you are doing it on the cheap on a good block you should be able to get away with basic flooring and a basic driveway for $10,000 or so.
Many building quotes only include the building. That means anything outside the building (like driveways) need to be paid for on top of what you are already paying. Depending on your driveway this could be fairly cheap or it could be extremely expensive (for the best of the best).
To save money you could look at not getting a driveway done immediately and look for cheap ways to do the driveway yourself (eg. gravel) until you have enough money to get a concrete driveway built.
NOTE: If you can’t afford a textured driveway straight up you can always go with your standard concrete driveway to start with and when you have some more money get it painted so it looks like it has a bricked effect or any other effect you want.
Some companies provide no landscaping at all, and some provide just a small amount of landscaping (eg. 15 square metres of turfing). You can save money by purchasing lawn seed yourself and building up your garden over time with some cheaper plants and elbow grease.
Generally speaking the bigger the slope of your land the greater the cost. We were recently speaking to ProCorp (turnkey homes) who have a great reputation and they were estimating an average cost of $6,000 for every 1 metre of fall on the property. If the fall is sideways across the block then it is actually $9,000 for every 1 metre of fall.
If your block has an extremely steep slope then it is likely that the cheaper home building companies won’t be able to build their homes on your land. You will then need a custom design and a custom builder.
8. Poor Soil
From the research I have done the best soil is known as M classification. This is what builders will base their quotes on. If you don’t have M classification soil then you are going to incur extra costs.
I would love to say it is an extra $10,000 for each increase in soil classification but it is actually dependent on your builder and the type of property you are trying to build.
9. Bushfire Attack Level (BAL)
If you are in an area that is very bushy, or close to bush or national park then your property may have a Bushfire Attack Level (BAL) rating. If you have a bushfire attack level rating then there are changes that need to be made to the building of your home to make it as bushfire safe as possible.
These all incur costs. So speak to your builder for more accurate figures.
10. 1:100 Flood (Flood Prone Areas)
If the area is prone to flooding then this will also incur costs as your house needs to be designed in a way that if a 1 in 100 years flood comes through that no one in the property will die. As always these changes are not standard and thus incur extra costs.
11. Land Registration
I am not familiar with land registration as I have only been looking at blocks that are already subdivided and registered. However, if the land is new and not registered then there may be extra costs. (eg. Connecting electricity, plumbing and sewerage).
Speak to your real estate agent or building company for an accurate estimation of these costs on your desired block of land.
12. Wheelie Bins
You may need to purchase your own wheelie bins from your local council for the rubbish collection. From my research it is estimated that these can cost around $600. However, for an accurate figure speak to your local council.
13. Fees for Closing Roads or Causing Interruptions
If the builders are required to close the road or interrupt traffic then this may incur a fee from your local council or state government. Talk through this with your builder to see if this applies to you.
14. Lender’s Mortgage Insurance
If you are borrowing more than 80% of your loan then you are likely to incur Lender’s Mortgage Insurance. This is a fee paid directly to the bank as your loan carries more risk to them. This can often be added to the loan or may be required to be paid up front. Speak to your bank or mortgage broker about this.
15. Interest Repayments While the Property Is Being Built
If the property is an investment, or even if you are living in it you are going to have to pay your loan before the property is finished being build. This means you will either be receiving no income from the property (if investment) or will likely be paying rent and your mortgage (when it is your own home) for a period of time until you are able to move into the property.
Builders are generally paid in instalments after the work is done. Your specific instalments are based on who builds your property and what they outline in their agreement with you.
In the first few months you will only have to pay interest on the price of the land and a deposit (assuming you keep the rest of the money in an offset account) but as the property comes closer to completion and you pay more to the builder your loan will become larger and your interest repayments greater.
Prepare for this extra cash flow expense appropriately. This will vary based on the size of your loan, interest rates and your scheduled payments to your builder.
Speak To The Experts When Trying To Calculate The Hidden Extra Costs of Building A House
At the end of the day you cannot accurately estimate the hidden extra costs of building a home by yourself. You need to take advice from the experts. Speak to your real estate agent and the company/builder you have chosen to build your home for a better estimate of what your costs will be.
Remember, until you doing your soil and contour surveys costs can change significantly. After these surveys are done many companies will fix their prices. However, bad things can always happen so it can be a good idea to keep a ‘just in case’ buffer fund.