How to save money on a new home build

Mark Bryson - Tuesday, July 11, 2017

House prices in Melbourne seem to be heading only one way – and that’s up. The average median house price in the city has hit $800,000 and still rising. Rather than buy an existing house, many prospective homeowners are considering building a new home in an outer suburb or buying a rundown house, knocking it down and building new on the land. 

Everyone is looking for ways to save money on home ownership, particularly when building new. In past years, savings could be made by labour-only building, where a home owner managed the build and employed contractors such as carpenters and other tradesmen to complete the house. However, with tighter regulations around the definition of an owner/builder and strict compliance around workplace health and safety and building insurance, labour-only building has become much more difficult.

Historically, labour only building meant the owner was responsible for the selection and hiring of all the tradesmen, deciding on and buying all building materials and the co-ordination, supervision and quality control of the project. Many people believe this project management can be done in their spare time and avoids having to pay the builder’s margin to co-ordinate the build. However, the job is way beyond the capabilities of a part-time amateur.

There are courses and workshops available to learn more about building, which lead to an eLearning assessment that must be completed before applying for a Certificate of Consent. However, a weekend workshop does not replace a carpentry or building apprenticeship. Labour only contracts only work if the owner has suitable qualifications and experience and is supervising the project full-time. Or they have appointed a project manager who is onsite daily.

Trying to co-ordinate the arrival of materials and sub-contractors from a remote location is fraught with difficulty and leads to delays and price blow-outs. Other ways to save money is by purchasing a modular or kit set house. A modular house is constructed in a factory and transported to the site already built up. It is then installed on the site and services are connected.

It is a quicker build, as construction can begin off-site while building permits are applied for and funding arranged. However, there is little room for modification and the house size is limited to the size of the truck. If your block is a long way from the factory, any savings made in construction can be eaten up in transport costs.

Kit set homes are like flat-pack furniture. The walls and roof are constructed offsite, transported flat and put together on site, similar to a jigsaw puzzle. Kit set homes often don’t include fittings, services, or construction. Resale values of both kit set and modular homes are usually lower than custom built homes.

Large building companies often advertising first home packages for very competitive rates. The designs may be limited and the location is restricted to only newly created suburbs but the prices look very attractive. However, the clients should check for hidden extras not included in the initial price. Before the house build gets underway, there are surveying and engineering costs.

Unless the land is completely flat, it will cost extra to prepare the site. A soil and contour test can cost $2000, and if it’s clay, or full of rocks, the building price increases. If the land is sloping, it costs up to $9000 extra for each metre of slope. Many project builders will not build on a block with more than a three-metre slope. If your house is in a bushfire or flood area, there will be an extra cost to ensure the house and residents are safe in the event of a natural disaster. If accessibility to the site is difficult or trees need to be removed, the homeowner is up for more costs. Retaining walls and easements can also add thousands to the site budget. Most quotes for basic housing do not include driveways or paths. These can be very expensive additions to the house costs. Fences and landscaping also costs thousands of dollars extra.

Remember the old adage – if it looks too good to be true, it probably is. Trying to save money when building a new home doesn’t always work and there are often hidden costs when it’s done on the cheap.

Berstan Homes is a custom new home building company which takes care of everything.

Managing Director, Mark Bryson, says he can work with client’s plans, or suggest one of the company’s designs. Everything, from the surveying to the inside décor is taken care of. And the quote is inclusive of many of the costs mentioned above.

Most of all, Berstan Homes gives clients peace of mind while their biggest asset is being built. And you can’t put a price on that.