Home Building Costs in 2025: How to Budget Smart and Avoid Surprises
Many homeowners assume that their builder’s quote is their total cost—only to be shocked later by additional expenses. From design contingencies to council fees, the final project cost is often 25-30% higher than the initial quote.
In this article we’re here to help avoid that happening to your upcoming building project.
A common mistake made when considering construction budgets is thinking that the Contract Amount with a builder will be the same as the Total Project Cost.
This can lead to some serious buyer’s remorse if you don’t know what to expect upfront. Here is a quick example to show just how different those two figures can be.
How Much Does a Custom Home Really Cost in 2025?
The BMT Construction Cost Table is released every year and quotes the following sqm prices inclusive of GST for architecturally designed homes:
Low $4572.7
Mediuam: $5854.20
High: $8,188.4
As you can see below, these sqm rates do not include everything and are just a guide. The information given here is general and should not be used for your project without the professional advice of a registered quantity surveyor (which I am not).
New Single Storey 3 Bedroom House Example
240sqm at $5,500/sqm Construction Cost = $1,320,000
This is a generic rate for an architectural home in Melbourne and may not apply to your project$132,000 Design Contingency (10%)
To cover a little scope creep for things you forgot you needed or a higher standard of finishes than you may have originally planned for$1,452,000 Net Construction Cost / Contract Amount
Figures Include Estimated Builders Margin of 15% - equivalent of $217,800 in this example.$145,200 Construction Contingency (10%)
for unexpected things on site like rock in the ground, rotten studwork, asbestos, soft spots, and more$1,597,200 Total Construction Cost
$159,720 Professional & Authority Fee Allowance (10%)
This allowance covers the fees of a basic project team of quantity surveyor, land surveyor, geotechnical engineer, structural engineer, civil engineer, ESD consultant, and architect (including interior design). It also includes the statutory fees required to pay to council.
Note: Efficiencies of scale do apply. As a % this will typically decrease as construction costs increase - and increase as construction costs decrease.$1,756,920 incl GST Total Project Cost
What Additional Costs Do You Need to Plan For?
Escalation – allowance for cost increases over time - because 2025 costs will not be 2028 costs.
Furniture & Equipment Allowance – a new home doesn’t need to mean all new furniture but it is a good time to invest in key pieces that do your new home justice.
Landscaping (+10-20%) – no home is complete without a useable landscape - the only question is “Will you do it now or after complaining about the mud and dirt in the backyard for another 3 years?”
Construction Quote vs. Total Project Cost: What’s the Difference?
Construction Budget Breakdown
Frequently Asked Budget Questions
Does this mean that every 3-bedroom home will cost $1.8m to build?
Absolutely not! Your home will be unique and so will its budget. This example is just a guide to the kinds of costs that are taken into consideration during your project.
You can see in this graph that the actual Construction Contract (or Tender Price) may only include around 70-75% of the Total Project Cost.
I have a quote from a builder. They don’t mention these other costs.
When dealing directly with a builder, it’s important to understand exactly what’s included – and more importantly, what’s not. Many builders won’t include contingency amounts in their pricing because these are unknowns to both parties. Any unforeseen items that arise during the build and fall under your contingency will be treated as variations to the contract, and these are typically charged at a premium.
It’s also worth being cautious of quotes that sound too good to be true. Some builders will verbally give you the number you want to hear – especially in early conversations before any detailed drawings or specifications exist. But once real drawings are produced and the full scope becomes clear, that initial figure can quickly increase – sometimes significantly.
There are countless stories of clients who were quoted around $800,000 for a build, only to end up paying $1,250,000–$1,350,000 after accounting for customisations, upgrades, and variations on site. Transparent pricing is critical – and the best way to achieve that is with clear documentation from the outset.
Choose Your Construction Pathway
Did you know?
“For the median Melbourne house price of $1,200,000, after 10 years the homeowner that employed an architect is $256,000 better off than the homeowner that didn’t.”
That’s according to the latest research by carried out by the University of Melbourne and ArchiTeam in 2018*, which also states that “for every $1 spent on architectural fees, the homeowner gains $11.40.”
*It’s important to note that this research was published prior to major global events, including the COVID-19 pandemic, which have significantly impacted construction costs, supply chains, and the property market. While the underlying value of architectural services remains strong, current pricing conditions may differ considerably from those at the time of the study.
Thinking About Building?
Get a Budgeting Plan First.
📌 This call is for homeowners who:
✅ Are planning a renovation, extension, or new build
✅ Want to avoid budget surprises & unexpected costs
✅ Need expert guidance on total project costs
Now booking for April 2026.
“Prescription without diagnosis is malpractice”
Every Whisker Architecture project begins with a Home Masterplan Report. It is your strategic roadmap, giving you clarity on design possibilities, budget expectations, and the practical considerations that shape your home before you commit to design or construction. By investing upfront, you save time, money, and heartache later, with advice you can trust from day one.
Inclusions
On-site Briefing Session: We walk your site together, explore how you live, and understand the goals, challenges and long-term intentions for your home.
Site & Planning Review: A clear explanation of zoning, overlays, services and any constraints that may influence your options in plain English.
Inspiration Snapshot: A curated overview of style and materials so we begin with shared visual direction.
Three Tailored Design Pathways: The Dream, The Budget and the Goldilocks, three distinct ways to shape your home based on lifestyle fit, desired outcomes and budget ranges.
Cost Comparisons: Independent cost guidance for each pathway so you understand the implications of scope, materials and construction approach.
Complete Project Budget: A forecast of consultants, approvals and contingencies for a realistic view of total project investment.
For renovation projects, existing floor plans (including realestate.com.au marketing plans) are usually sufficient. If no plans are available, a site measure may be required and will be confirmed with you before proceeding.
What Happens Next
Your Home Masterplan Report completes the Clarity and Options stages of our process. From here, you can pause, refine or move into the Certainty stage with a clear understanding of what is right for your family.
Book your Home Masterplan Report today and start with clarity.
