Date 25.10.2024 Category Custom Author Michael Agostino

Perth Custom Home Building Costs: A Comprehensive Guide

Building a custom home in Perth is an exciting journey, but it’s also a significant financial undertaking. This comprehensive guide aims to provide you with a clear understanding of the costs involved in building your dream home in Perth as of 2024.

From land costs to construction expenses, we’ll break down the various factors that influence your budget and offer insights to help you make informed decisions throughout your home-building process.

Navigating This Guide

 

 

Key Factors Affecting Custom Home Building Costs in Perth

1. Cost of Land in Perth

The first major expense in your custom home project is the land itself. As of September 2024, REIWA reports that the median land price in Perth is $290,000, but this varies significantly depending on lot size:

  • Small lots (less than 300sqm): Median $258,000
  • Medium lots (300 to 450sqm): Median $333,000
  • Large lots (greater than 450sqm): Median $470,000

Land prices in Perth also vary dramatically by suburb:

  • Inner-ring suburbs (e.g., South Perth): Prices can be as much as 10 times higher than the Perth median. For instance, a small lot under 300sqm in South Perth has a median price of $2.05 million.
  • Middle-ring suburbs:
    • Karrinyup: Median $755,000 (ranging from $464,000 for small lots to $1.11 million for large lots*)
    • Willetton: Median $725,000 (ranging from $618,000 for small lots to $958,000 for large lots*)
  • Outer suburbs:
    • Baldivis: Median $230,000 (ranging from $180,000 for small lots to $275,000 for large lots*)
    • Ellenbrook: Median $225,000 (ranging from $205,000 for small lots to $395,000 for large lots*)

*small lots = under 300sqm, large lots = over 450sqm. For more information on average land prices per Perth suburb, visit https://reiwa.com.au/the-wa-market/perth-metro/.

Remember, these figures are averages and can fluctuate based on specific location, lot size, and market conditions.

While it might be tempting to choose the cheapest available land, it’s important to consider more than just the cost. The location you choose will not only impact your lifestyle but also influence your property’s potential for value appreciation over time. When budgeting for your custom home, carefully weigh these factors alongside your personal preferences and long-term goals.

 

2. Cost of Building in Perth

Perth Home Building Cost Trends 2024-25

Building costs in both Perth and Australia have been increasing dramatically over the last several years due to various factors, including supply chain disruptions, material shortages, and labour constraints.

However, as of mid-2024, building costs in Perth have shown signs of stabilisation. According to a recent update from Rawlinsons Cost Management, the rate of building cost escalation is returning closer to the historic average of 3-5% per annum. Having said this, building costs still remain high compared to historical averages.

There are several factors which still influence construction costs in Perth:

  1. Ongoing Labour Shortages: The availability of skilled labour remains the biggest challenge for contractors across most trades. An increasing number of experienced tradesmen retiring is creating a skills and knowledge gap.
  2. Industrial Relations: There’s a current push for new Enterprise Bargaining Agreements (EBAs) for many trades, which may impact costs, particularly for larger projects.
  3. Other Infrastructure Projects: A significant pipeline of social infrastructure projects (schools, hospitals, social housing) is on the horizon for WA, which may impact resource availability for residential construction.
  4. Material Costs: While many material supply costs have stabilised, some increases are still being experienced:
    • Plasterboard and concrete prices are still rising
    • Copper cable costs are increasing, though some contractors are mitigating this by bulk buying in advance

 

What does this mean for custom home building costs?

As of September 2024, industry experts estimate the cost of a building a new production home in Perth to be around $2,200 to $4,100 per square metre.

While not always the case, the cost of building a custom home will often come with a higher price tag per square metre than your standard new home build. Custom and luxury home construction expenses can often exceed the upper end of the standard cost range, potentially reaching $5,000 per square metre or more for high-end, architecturally designed homes.

This is due to several factors:

  • Premium Materials: Custom homes often use higher-end or specialty materials that are more expensive than those used in standard builds.
  • Architectural Design: The cost of a bespoke architectural design is typically higher than using pre-existing plans.
  • Unique Features: Custom homes may include unique features or complex designs that require specialised labour or construction techniques.
  • Quality of Finishes: Custom homes often feature higher quality and luxury finishes throughout, which can significantly increase the overall cost.

Given the dynamic nature of the home building market, we would highly recommend reaching out to our team for the most up-to-date and accurate cost estimates. We would be happy to provide you with a no-obligations quote to help you budget for your custom home building project.

 

3. Permit and Regulatory Fees

When building a custom home in Perth, you’ll need to factor in various permit and regulatory fees. These costs are set by state regulations and local councils. Here’s an overview of the main fees you might encounter, based on the most recent information from the Department of Energy, Mines, Industry Regulation and Safety:

1. Building Permit Fees:

  • Certified application for a Class 1 (residential) building: 0.19% of the estimated value of the building work, but not less than $110.00
  • Uncertified application: 0.32% of the estimated value of the building work, but not less than $110.00

2. Occupancy Permit: $110.00 for most applications

3. Building and Construction Industry Training Fund (BCITF) Levy: 0.2% of the total contract value for projects over $20,000

4. Water Corporation Fees: These can vary, so it’s best to check directly with Water Corporation

5. Western Power Fees: Fees for electrical connections can vary; check with Western Power for current rates

6. Council Bonds: These can vary by council and project scope

7. Home Indemnity Insurance: Required for works over $20,000, typically around 0.5% of the contract value

8. Building Services Levy:

  • For work valued over $45,000: 0.137% of the value of the work
  • For work valued at $45,000 or less: $61.65

It’s important to note that these fees can change and may vary depending on your specific project and location. Some additional fees may apply for specialised applications or services.

For the most accurate and up-to-date fee information specific to your project and location, we strongly recommend:

  1. Checking with your local council directly, as they may have additional local fees or different structures.
  2. Consulting the Department of Energy, Mines, Industry Regulation and Safety website for the latest state-wide fees.
  3. Speaking with a local building professional who is familiar with current fee structures in your area.

Remember, these fees are an important part of your overall budget and should be factored in early in your planning process. If you’re unsure about which fees apply to your project, don’t hesitate to reach out to the relevant authorities or seek professional advice.

 

4. Design and Architectural Fees

When building a custom home, you’ll encounter a cost that buyers of pre-designed project homes typically don’t face: design and architectural fees. While this additional expense might seem daunting at first, it’s an investment that can significantly enhance the value, functionality, and uniqueness of your home.

Architects and designers in Perth typically charge their fees in one of three ways:

  • Percentage of Construction Cost: Usually ranges from 8% to 15% of the total construction cost.
  • Fixed Fee: A set amount agreed upon based on the project scope.
  • Hourly Rate: Typically ranges from $150 to $250 per hour.

Furthermore, there are several factors can influence the cost of architectural and design services:

  • Complexity of the project: Unique or challenging designs require more time and expertise.
  • Size of the home: Larger homes generally involve more design work.
  • Level of detail required: High-end finishes and custom features increase design time.
  • Experience of the architect: More established architects often charge higher fees.
  • Extent of services: Full-service packages cost more than basic design-only services.

Tips for Managing Design Costs

  1. Be clear about your budget from the outset.
  2. Decide on the level of service you need – full service or just basic design.
  3. Consider a fixed fee arrangement if you’re concerned about cost overruns.
  4. Minimise changes once the design is finalised to avoid additional fees.
  5. Ask about 3D modeling services, which can help you visualise the space and reduce costly changes during construction.

Remember, while design fees are a significant upfront cost, good design can save money in the long run through efficient use of space, energy-saving features, and avoiding costly mistakes during construction.

 

5. Possible Hidden Costs

When budgeting for your custom home in Perth, be aware of these potential hidden costs that could impact your overall budget:

  • Site Preparation: Costs for soil testing, site clearing, and leveling can range from a few thousand to tens of thousands of dollars, depending on your lot’s condition.
  • Utility Connections: Connecting to city services or installing a septic system can cost between $5,000 and $20,000 or more.
  • Landscaping and Outdoor Features: Basic landscaping, driveways, pathways, and fencing can easily add $10,000 to $50,000 or more to your budget.
  • Window Treatments and Finishes: Items like blinds, curtains, or additional interior finishes might not be included in your initial build quote.
  • Smart Home Technology: If desired, budget extra for integrated smart home features.
  • Council Contributions and Requirements: Some councils require contributions for local infrastructure or have specific building requirements (like bushfire protection) that can increase costs.
  • Temporary Accommodation: You may need to budget for alternative living arrangements during certain phases of construction.
  • Changes and Variations: Any alterations to the original plan during construction can lead to additional costs.
  • Professional Fees: You might need to hire additional professionals like surveyors or interior designers.

To manage these potential hidden costs:

  1. Conduct a thorough site investigation before finalising your home design.
  2. Ensure your building contract clearly outlines what is and isn’t included.
  3. Set aside a contingency budget of 10-20% of your total budget for unexpected costs.
  4. Maintain regular communication with your builder to avoid surprises.

By being aware of these potential extra expenses, you can plan more effectively and avoid budget blowouts during your custom home build project.

 

Financing Costs and Considerations

Financing a custom home build in Perth comes with unique considerations compared to purchasing an existing home. Here are key points to keep in mind:

Construction Loans

  • Structure: Unlike standard mortgages, construction loans are typically interest-only during the building phase and are paid in stages as construction progresses.
  • Interest Rates: Often slightly higher than standard home loans, usually by 0.5% to 1%.
  • Drawdown Schedule: Funds are released in stages, aligning with construction milestones. This can affect your interest payments and cash flow.

Deposit Requirements

  • Most lenders require a minimum deposit of 20% of the total land and construction costs.
  • Some may accept as low as 10% with Lenders Mortgage Insurance (LMI).

Additional Costs

  • Valuation Fees: Lenders may require multiple valuations throughout the construction process.
  • LMI: If your deposit is less than 20%, you may need to pay Lenders Mortgage Insurance.
  • Progress Inspection Fees: Your lender may charge for inspections at each stage of construction.

Key Considerations and Tips

  1. Pre-approval: Consider obtaining loan pre-approval before finalising your building contract to ensure you can borrow the required amount.
  2. Living Expenses: Make sure you’re financially prepared to continue paying your current mortgage or rent during the construction period.
  3. Fixed Price Contract: Opt for a fixed-price building contract. Many lenders prefer these as they help manage financial risk.
  4. Shop Around: Compare rates and terms from different lenders. We recommend working with a mortgage broker experienced in construction loans to get the best rates.
  5. Understand the Drawdown: Be clear on how the drawdown schedule affects your repayments and cash flow.
  6. Include a Buffer: Include a buffer in your loan amount for:
    • Potential cost overruns or changes during construction.
    • Possible additional costs due to construction delays, as most construction loans have time limits (typically 12-24 months).
    • Unexpected expenses that might arise throughout the building process.

Remember, financing a custom home build is more complex than a standard home loan. It’s advisable to consult with a financial advisor or mortgage specialist who has experience with construction loans in Perth to guide you through the process.

 

How We Help Manage Your Custom Home Budget

Building a custom home in Perth is a significant investment, but with careful planning and the right team, it can be a rewarding experience that results in your perfect home. At Trendsetter Homes, we’re committed to helping you navigate this process, ensuring your dream home becomes a reality within your budget.

Our unique, full-service approach to custom home building that can provide several cost-saving advantages throughout your project:

  • In-House Management: At Trendsetter Homes, you’ll work with the same team of designers, builders, and interior architects throughout building journey. By handling your entire project from concept to completion, Trendsetter Homes can help reduce unexpected costs that often arise from miscommunication between different contractors, ensuring your priorities are understood at every stage.
  • Tailored Design: Our experienced designers create floor plans that not only meet your specific needs but also optimise for cost-efficiency and long-term value. By carefully considering how rooms flow and interact, we create homes that are both functional and efficient. This thoughtful approach can help avoid expensive changes during construction and potentially reduce long-term living costs or the need for future renovations.
  • Attention to Detail: Close collaboration between site supervisors and designers during construction helps prevent costly errors and keeps your project on schedule.

Remember, every custom home project is unique. Contact Trendsetter Homes today for a personalised cost estimate tailored to your specific needs and preferences.

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Managing Director
Trendsetter Homes
About the author

Michael Agostino

Michael Agostino is the visionary Managing Director of Trendsetter Homes, a premier luxury custom home builder in Perth. Displaying an exceptional talent and dedication to the craft from a young age, Michael became one of Western Australia’s youngest registered builders at just 20 years old. His meticulous eye for detail, pursuit of innovation, and commitment to client satisfaction have earned him numerous accolades over his 20-year career, including the prestigious 2022 Master Builders (WA) Ric New Medal for Excellence.

This esteemed industry recognition celebrates Michael’s outstanding potential, creativity, and significant contributions to the building and construction sector in Western Australia. Under his leadership, Trendsetter Homes has cultivated strong partnerships with industry specialists to deliver award-winning residences that seamlessly blend form, function, and unparalleled craftsmanship. With homegrown expertise, a deep understanding of the Perth market, and a proven track record of success, Michael and his team provide a seamless, transparent, and personalised custom home building experience tailored to each client’s unique vision and lifestyle.