Is it more expensive to buy or build a house in Australia? What is the average cost of building a house? How much deposit do I need to build a house?


A question many future homeowners have is that of whether to buy or build a house. Both options involve major investments, so you want to be sure you know all the facts and what is involved before you make the big decision. If you decide to build, you’ll need to educate yourself on all the various aspects of building so that you know how much you’ll be putting out and for what materials and services.

In addition, you want to be sure that you can find quality home builders. Let’s take a look at some recent information about building costs and components that should shed some light on these questions.

Is it more expensive to buy or build a house in Australia?

Although statistics vary on the cost differences between buying and building, it generally appears that building is the significantly more cost-effective option. While there are certainly some advantages to buying – obviously, knowing exactly what you’ll get when you pay for it, not having to worry about potentially shoddy/overpriced construction, etc – if you’re looking to save money, it would definitely be worth your while to consider the option of building a house.

Beyond that, when you decide to build a house, you have the opportunity to build exactly the home that you want – create your “dream house”. And beyond saving money on the cost of the house itself, these days you can also save by installing energy-efficient lighting and using alternative energy sources, etc. So over the years, your savings could add up significantly.

What is the average cost of building a house in Australia?

The cost of building a house in Australia varies, depending on a number of different factors including location, size and building materials etc. However, there are nationwide statistics that will give you a rough idea of what people usually spend. In 2022 the average cost of building a house for Australia as a whole was $473,000, according to the Australia Bureau of Statistics.

There are a number of components that you should keep in mind when considering the cost of building a house. These include the following:

  • The cost of land. As mentioned above, property prices vary considerably depending on the area you’re in. One of the reasons for this is the comparative cost of land in different regions. According to the ABS, the cost of building in Sydney is almost three times higher than building in Adelaide. 

In looking at a state-by-state comparison, the lowest estimate for building costs is in Tasmania, which has an average price of $285,000. The highest is in ACT, with an average cost of $440,000. 

  • Size of your house. Clearly, another major factor involved in your building cost will be the size of the house you build. One recent report estimated that, although the average home size in Australia is around 196 sqm, the average size of new homes being built recently is 236 sqm. 

As you’d expect, the more you build, the more materials you will need. And if you’re including new or unusual features in your house that require the use of specialised equipment, this will drive costs up even further.

  • Building material type and quality. This also sounds like a given, but it bears repeating nonetheless. There are quite a few specific factors that you should educate yourself on when considering the type of building materials you want to use, including:

  • Toxicity. People are becoming increasingly cognizant of issues related to high lead and other toxic content in pipes and paint. For example, paints now come in “low to no VOC (volatile organic compound)” types, which are much safer than traditional paints. 

In addition, asbestos can be a major problem, particularly in insulation materials. Read up on what acceptable levels are before you start talking to construction companies.

  • Traditional versus alternative materials. Another thing that is growing in popularity is the use of renewable materials in home building. The use of bamboo, wool insulation, and “rammed earth” materials is becoming increasingly common. Rammed earth construction refers to the use of earth, chalk, lime, or gravel in constructing foundations, floors, and walls.

  • Land condition. In addition to the cost of land by location, another consideration is the actual condition of the land that you build on. This can influence the amount that you’ll have to spend on your foundation, etc.

  • Speed. Within what period of time do you want to finish your home? If you’re looking to do a rush job, this will obviously drive up costs. It’s best to read up on how long construction generally takes to complete and how much extra you’d have to pay to have it expedited. And, of course, you’ll want to be sure that the company you hire has a solid reputation for getting the job done in a timely manner. Look up as many third-party review sites as you can and read up on different companies’ reputations. 

How much deposit do I need to build a house in Australia?

Another question that many people have before building a house is how much they will have to pay as a deposit. Although deposit amounts also vary from place to place, and also depend on other conditions, it is estimated that you will have to put down 20% of the total cost of your home as a deposit. The minimum is 10%, but the averages are generally higher. The average couple under 35 spends six years saving this amount. 

Many things to consider, but building a house is usually worth it

Although there are a lot of things to think about in considering the option of building rather than buying, many people find that it is worth their time and effort. Not only will you save on construction costs, but using modern construction techniques and energy-saving materials will ultimately pay dividends in the future. And beyond that, you’ll be able to construct the home you want according to your own personal preferences.

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