How does price per square metre work for a new home build?

We've all heard of price per square metre, but is this way of measuring the cost of your new home the right metric to use?

Ever wondered about that price per square metre thing when planning your dream home?
Yep, we know, it’s a common yardstick for construction costs, but in all honesty it doesn’t tell you the whole story. Especially when it comes to planning the cost of building a home.

Having made that bold statement, let’s dive into why price per square metre isn’t the best way to gauge your budget…

So, what’s cost per square metre all about?

Well, builders often throw this number at you. It’s like a grand total of the cost to build your home, divided by the size of the design – everything from the ground up to the final touches, neatly packed into one square metre.

Or so it might seem. But here’s the catch: using this metric is not the smartest move.

See, building a house involves so many variables – site specifics, material choices, design intricacies, you name it. Relying on cost-per-square-metre comparisons oversimplifies it all. It completely misses the mark on essential aspects like kitchens, bathrooms, and other must-haves such as heating, cooling, and water systems.

When you get a cost per square metre, it could be too low (giving you a nasty surprise further down the line), or too high (which means you could be getting ripped off).

Building plans, a calculator and coins on a desk

Let’s think about the concept of core costs.

Regardless of a home’s size, there are certain spaces that really have to be included in the build, such as kitchens & bathrooms – they’re indispensable for daily living, that’s pretty obvious.
And these core building costs take into account not only the physical construction of these areas, but also the essential plumbing and electrical work required for their functionality.

So, if we think of the non-negotiable nature of a kitchen and laundry in any home, the core cost of making sure these spaces are included is there no matter how big or small the home is, and as such skews the dollar amount when looking at price per square metre.

And that’s not all price per square metre overlooks. Realities of building a home can throw surprises your way – ground issues, design tweaks, delays, weather woes – all adding up to extra costs. Even the smallest details, like fancy light fixtures or a specific type of floorboard, can sway the final price.

What about what the rate is hiding?

But just as important is what a price per square metre might hide. Builders may be lumping all sorts of assumed costs into the rate, such as minimum travel distance, average cost of cabinetry, a generalised freight charge and extra administrative fees. And they’re included regardless of whether they apply to your project or not – you pay for it under the guise of a metre rate that’s supposed to be accurate, but doesn’t take your specific situation into consideration.

The industry’s reliance on the price per square metre as the best way for estimating construction costs can then impact you and the way you’ve planned your budget, thanks to a few factors:

1. Oversimplification of Costs: Price per square metre often oversimplifies the intricacies of construction projects. Construction expenses involve a wide range of factors such as site conditions, material quality, design complexity, and the specific requirements of the project.
2. Risk of Misleading Comparisons: Comparing projects based solely on the price per square metre is misleading. Projects with different complexities, design features, or material specifications may have similar per square metre costs, but the overall project costs and value delivered to clients can vary significantly.
3. Inadequate Contingency Planning: Construction projects are susceptible to unforeseen challenges such as ground issues, weather disruptions, or design modifications. Price per square metre does not allow for adequate contingency planning in your budget, which could leave you unprepared for unexpected costs and delays. Or it could include all of these so-called contingencies that are irrelevant to your site and home.
4. Client Dissatisfaction: Clients expecting a fixed cost per square metre are often disillusioned when faced with additional expenses resulting from project changes. This dissatisfaction can lead to disputes, a breakdown in trust between clients and builders and potentially tarnish the whole process of getting your new home.

By now, hopefully you’re asking yourself what a better approach might be.

Well, instead of fixating on cost per square metre, look at the real picture of your situation, not everyone else’s too.

To really understand the cost of building your home, we simply have to tally up everything that goes into the process – from the tiniest details such as screws and paint, to the bigger things like groundworks and labour. And no more. No less, but no more.

By thinking about exactly what goes into all aspects of your home, we can account for every component, offering a much better understanding of the overall cost. By adding up costs of materials, labour, and design details, we get a much better picture of where the money is going.

And that’s the secret to ensuring that you get fair dinkum value when you get a new home built.

Drill and Screw on wooden background

Isn’t that a bit overkill?

While it may seem an overkill, calculating the cost of for everything in your home guarantees a thorough grasp of the actual cost, and helps avoid budget surprises during the construction process, while giving you peace of mind that you’re not paying any more than you need to.

When we take this approach it’s clear that looking solely at the cost per square metre is a little bit silly.

By making sure you factor costs for everything that’s required to finish your home, you’ll be sure to have a much clearer picture of what you’re actually spending, and the finances you require.

For you to get the most value from your builder, make sure you talk to them about every aspect of your home and get a good understanding from them about the process, the materials and the potential for budget changes, allowing you to plan effectively and see the real cost of your home.

If you have any questions, why not give us a shout – we’re here for a no-obligation chat anytime.

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