The Cost to Build a House in Australia

If you've ever wanted to build your dream home, you'll need to work out how much money you can borrow or save before you start building.

While calculating the average cost can be difficult, increasing costs related to building materials, supply chain disruptions, and labour shortages have made it much more difficult to figure out your total cost to build a house in Australia.

In 2025, the cost to build a house is strongly influenced by:

• Land size - In Australia, the cost of building is expected to be between $620 - $3900 per square metre. This doesn't include design or decoration costs. [1]

• Location - The cost of building a home will vary based on where you live in Australia (capital cities and regional areas).

• Building material costs - The cost of higher quality materials, including timber, copper and aluminium, has continued to rise in price.

• Labour costs - Increased labour costs are driving growth in the building industry.

• Design complexity - Customised designs or energy-efficient designs will generally cost more to build. This may also depend on your builders and whether they are custom or volume builders.

Building larger homes requires additional features, which leads to additional costs, requiring more materials, labour demands and a longer building timeline. All of these elements contribute to the overall cost of building a house.

In Australia, building costs are normally calculated by multiplying the total floor area (m2) by the cost estimate ($ per m2) provided by the building contractor. And whether you use a timber finish or build a house out of bricks, the price of your materials will greatly impact the final price.

As of 2025, construction costs have risen in line with supply chain uncertainty and an increased demand for materials. [2]

For example, the cost of timber, board and joinery rose by 1.8% in the September quarter due to timber window installations, other metal products rose by 0.6% because of aluminium windows and doors, and other materials rose by 0.5% due to plaster products. [2]

On top of average building costs, there may also be some hidden costs that contribute to your overall budget and actual cost.

Here are some common additional costs in the house-building process:

• Land and site preparation - This includes land prices, preparing the construction site, testing for soil quality and land registration.

• Council and government costs - This includes building approvals, local council permits and fees, development applications and stamp duty.

• Service and infrastructure - This includes utility connections (water, electricity, gas), driveways and fencing and landscaping.

• Insurance and loan costs - This includes Home Building Insurance, Home and Contents Insurance, home loan fees and interest rates you'll pay on the loan.

Before you start the building process, you'll need to apply for:

1. Development Approval - Approval is issued by your local government authority.

2. Building Approval - Approval is issued by a licensed building certifier so that construction can start. You'll receive a certificate of classification when a certifier is satisfied that all building work is complete and suitable for occupation.

Keep in mind that this process may vary depending on the state or territory you live in.

Source: Australian Bureau of Statistics [4]

After peaking in March 2021, approvals reached an all-time low in February 2024, and they have continued to increase steadily since then. [4]

The National Housing Accord has set a target to build 1.2 million [5] new, well-located homes in the next five years. This is based on the number of building approvals for private sector houses (9,258) and dwelling units (15,984).  

As of June 2025, the Australian Government are not likely to meet this target in the first year alone.  [4]

Using Cotality's Home Value Index from July 2025, we’ve listed their estimate of the median price (for all dwelling types) in each capital city, regionally and nationally. [3]

Keep in mind, this information is based on index results as of 1 July 2025.

If you are a first home-buyer, then you may be eligible for the first home owner grant (FHOG). The first home owner grant is a one-off payment for first-time buyers who meet all of the eligibility criteria in their state or territory. This grant aims to reduce costs by offsetting the effect of GST on home ownership.

The Australian Government has recently introduced the First Home Guarantee Scheme for eligible home-buyers who have saved a minimum of 5% of the property value.

This scheme includes:

• An existing home, townhouse or apartment

• A house and land package

• Vacant land with a separate contract for a new build

• An off-the-plan apartment or townhouse

You can also look to lower costs with further first-home-buying assistance in your state or territory:

• Queensland

• New South Wales

• Victoria

• Tasmania

• Australian Capital Territory

• South Australia

• Western Australia

• Northern Territory

In previous years, building a house was considered a more affordable option compared to buying a new home.

But if you're looking to build a house in the near future, then you should factor in the increasing cost of building approvals, materials and ongoing time constraints into your timeline.

Remember, paying for the building materials won't be your only expense. You may also need to pay for land and site preparation, council costs, service and infrastructure costs and insurance.