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Key insights to plan and budget for your dream custom-built home

This article offers valuable insights into planning and budgeting your custom home construction, arming you with knowledge to make informed decisions.

Published August 29, 2023

Last updated September 2, 2023

Arm yourself with knowledge before building your custom home

A guide to help you navigate the highs and lows of building your dream home

Building your dream custom-built home is an exciting yet nerve-wracking experience, and one that comes at a premium due to the bespoke architecture and superior construction.

Factors such as budget, location, size, site features and sustainability play a significant role on your initial budget, ongoing expenses, future upgrades and resale value. This can transform your exciting adventure into an overwhelming and daunting experience.

This guide serves as a roadmap for navigating the complexities of building a custom home. It provides essential budgeting tips, planning guidelines, and valuable insights to set you on the path to a successful building project. Rather than an exhaustive and detailed resource on every facet of home construction, this guide is a curated checklist of key considerations that warrant deeper exploration, empowering you to make well-informed decisions.

The essentials: A blueprint for a successful custom home build

Undertaking the construction of your custom-built home is a complex undertaking that benefits from the guidance of professionals. Allocate a budget towards engaging the services of experienced architects, builders, and contractors with a proven track record from the outset. This early consultation not only streamlines the process but significantly reduces the likelihood of risks and complications. Even if the initial plans only involve the acquisition of land, seeking the advice of professionals at this stage is prudent to proactively address any potential issues that may be overlooked otherwise.

Invest in the expertise of professionals from the outset

Constructing a custom-built home is a substantial financial undertaking that requires meticulous planning and expert knowledge. Budget for and invest in experienced architects, builders, and contractors with a proven track record.

Seek the advice of professionals at the outset of your custom home project to facilitate a seamless building process and realise your dream home with minimal complications. If you are contemplating land acquisition, engage the services of a professional at this early stage to help you identify any potential obstacles that may be overlooked.

Balance your budget and long-term vision

Constructing a new home in a single phase is undoubtedly the most desirable and cost-effective approach.

However, if financial constraints hinder the realisation of your dream home, a phased approach may be the way to go. This approach focuses on essential features while planning for future improvements, making it easier and less costly to add enhancements later on. For instance, if high-end solar panels and batteries are beyond your initial budget, setting up conduits and access points during initial construction will simplify and reduce the cost of adding them later.

This strategic approach aligns your immediate budget with your long-term vision, enabling you to create your dream home that evolves and grows with your needs, at the least expense.

Vacant land, knockdown rebuild, or hybrid approach?

When planning for your new custom home, it is important to be aware of the options available to you, each with their own unique advantages and cost implications.

One option is to build on vacant land, which involves legal and stamp duty fees that can significantly impact your budget. It is essential to engage the services of a qualified and experienced legal professional to navigate this process. The amount of stamp duty you’ll pay can differ based on a range of factors, such as whether you’re a first-time homebuyer, purchasing vacant or established land, a foreign buyer, a concession card holder, or buying off-the-plan.

Another option may be a knock-down rebuild, especially when you love your current location but have outgrown your existing home and renovating is not viable. This approach often comes with lower-than-expected demolition costs and eliminates the need for administrative expenses, legal fees and stamp duty associated with property acquisition.

For those with more flexible budgets, a hybrid approach may be your best approach. Purchasing a property with an existing house and then demolishing it for a rebuild gives you the freedom to choose a location that suits your needs while also letting you start from scratch.

Prioritise sustainability for a triple win

When planning and budgeting for your new home, integrating sustainable options may appear to be an additional expense. However, see this as a three-fold investment: it benefits the environment, reduces long-term costs, and can potentially enhance the market value of your home.

For example, the installation of a solar power system can significantly decrease energy bills over time and may even qualify you for government incentives or rebates. Similarly, the implementation of greywater systems and water tanks can result in substantial savings on water expenses in the long run. In addition to water and energy, the utilisation of sustainable materials and smart home systems can provide increased durability, reduced maintenance requirements, and more efficient resource utilisation.

Prepare for the unexpected

“Expect the best, plan for the worst” should be your mantra when you’re setting your budget and plan for your custom-built home. Account for unforeseen expenses (and delays) that may arise unexpectedly.

It is always a good idea to have a contingency fund in place. This financial cushion can prove invaluable in navigating the uncertainties that may arise during construction of your home or project.

Coping with the emotional rollercoaster

Let’s talk about you. The process of constructing a home will challenge your ability to make sound decisions, test your patience, and even impact your interpersonal relationships. The journey will come with triumphs and setbacks, and it is important to recognise the emotional commitment required.

Maintain open communication with all parties involved in the project. Throughout the process reflect on your initial motivations that led you to embark on this exhilarating endeavor.

Patience will be your virtue

Patience is a virtue. And you’ll need a good dose of it when building your own home. Despite meticulous planning, setbacks are are almost inevitable. Be prepared for the timeline to extend due to weather, supply chain issues, or unexpected red tape and hurdles. Anticipate a prolonged timeline and maintain a flexible, yet pragmatic, approach to managing expectations and mitigating stress throughout the building endeavors.

Build smart: Understand your land before you build

Before you build your dream home, know your land well. Optimal orientation ensures energy efficiency and considering slopes and soil types can save you costly surprises down the line. Drainage planning is crucial, and if you’re building near the sea or in hazard-prone areas, specialised materials and regulations will impact your budget. Even the accessibility of your site can add unexpected costs.

A thorough groundwork sets the stage for a successful construction project.

Identify optimal home orientation

Orientation is the cornerstone for achieving a sustainable and harmonious home. Orientation is more than being able to capitalise on views. Orientation employs architectural and planning strategies that, through passive design, work with natural resources like sunlight, wind and shade to create a more energy-efficient and comfortable home.

Identifying the optimal house orientation should be a priority for prospective home builders.

Building on sloping sites

Sloping sites pose challenges. But they also may provide benefits such as views, innovative architectural opportunities, and superior natural light and ventilation. Sloping sites can potentially facilitate natural drainage, provide more privacy, and enable energy-efficient design choices such as natural insulation.

It is important to note, however, that the degree of incline of the terrain directly correlates with the complexity of the architectural design and, consequently, the greater the cost of construction.

Good drainage pays off

Adequate drainage is of utmost importance in both construction and landscaping. Drainage issues can stem from a multitude of factors, necessitating meticulous planning and budgeting. These factors may encompass topography, climatic conditions, regulatory stipulations, and aesthetic considerations.

It is prudent to plan and budget for the installation of a robust and effective drainage system at the outset. Doing so not only mitigates the inconvenience and expenses associated with repairing structural or landscaping damages but also mitigates costly and intrusive drainage maintenance in the future.

Soil analysis

It’s essential to make informed choices by conducting soil testing.

Failing to take soil type into account can substantially impact your building and landscaping budget. It can set the stage for costly adjustments and potential setbacks, making what was initially a budget-friendly plan turn into a financial burden.

In construction, an unsuitable soil type can require last-minute modifications to the foundation, resulting in unforeseen expenses for both materials and labor.

With landscaping, soil amendments, specialised plants, or advanced drainage solutions may be necessary if the soil is not conducive to the original plans. Inadequate drainage can also lead to erosion or water damage, resulting in additional costs for repairs.

Seaside construction

Building a home in close proximity to the sea presents an attractive prospect of picturesque views and a serene environment. However, it also presents unique challenges that can have significant financial implications.

Salty air can cause severe corrosion to traditional building materials. It is thus imperative to opt for specialised, corrosion-resistant materials such as marine-grade stainless steel, which can significantly increase the construction budget.

Failure to account for these additional costs during the initial planning stages may result in budget overruns and compromise the longevity and safety of your seaside home. Factoring in these higher material costs from the outset will ensure a successful and financially viable project.

Building in hazardous zones

In areas susceptible to natural disasters such as floods or bushfires, meticulous planning is imperative to minimise risks and expenses. These locations typically necessitate specialised construction methods and materials, which can escalate costs.

In regions prone to flooding, elevated construction, water-resistant materials, and advanced drainage systems are frequently mandatory. In fire-prone areas, expenses can soar due to the need for fire-resistant materials, specialised design, and adherence to stringent codes.

Constructing in hazardous zones requires adherence to specific regulations and the engagement of proficient contractors, which may result in prolonged project timelines and increased expenses.

Note: Building in hazardous zones will likely increase your insurance premiums, possibly even making your property uninsurable.

Site accessibility and location

The accessibility and location of a construction site can have a substantial impact on the associated costs.

In the event that the site is difficult to reach due to obstacles such as narrow roads or steep terrain, the transportation of materials, machinery, and labour may incur higher expenses. Additionally, specialised equipment and safety measures may be required, further driving up costs.

The distance that builders and contractors need to commute will impact their time and fuel costs – and may necessitate accommodation expenses.

Building blocks: Make smart choices from foundation to finish

The selection of the right materials is vital for your home’s aesthetic appeal, durability, environmental sustainability, and overall expenditure. Likewise, the integration of technology into your home’s design is equally important.

The following are factors to consider during your planning and budgeting, enabling you to make informed decisions that align with your financial constraints and long-term requirements.

External materials: Consider Australian climates

External materials must be capable of withstanding Australia’s diverse and harsh weather conditions. Choosing premium weather-resistant materials may come at a higher initial costs, but it will prove to be a cost-effective measure in the long run by reducing maintenance and repair expenses.

Wall selection: Balancing costs, durability and functionality

Choosing the right walls is crucial for both immediate factors like initial costs and long-term considerations such as durability and maintenance. While brick walls may have higher upfront costs, they offer better durability and load-bearing capabilities compared to alternative cheaper materials, such as cement sheets, Hebel, weatherboards, and timber. Aesthetics also vary, with brick offering a timeless look.

Maintenance and insulation are other key factors. Cement sheets may incur higher long-term maintenance costs due to susceptibility to damage and the need for repainting. On the other hand, brick walls are more durable and offer better thermal and sound insulation. Your wall choice will influence both immediate costs and long-term functionality.

Insulation: A smart investment in energy costs

Irrespective of your location in Australia, investing in quality insulation yields long-term benefits. Effective insulation significantly reduces your ongoing energy expenses, which is crucial given Australia’s exorbitant energy costs.

The insulation material you opt for, be it fibreglass, foam boards, or cellulose, can vary in cost, thereby affecting your initial construction expenses. Nevertheless, your ongoing savings on energy bills will justify the investment.

Frames: The backbone of your home

The frame of your house serves as the fundamental support system, the backbone holding everything together.

The frame you choose will not only affect your budget but also impact the long-term maintenance and replacement costs. For instance, timber frames are a cost-effective option, but are vulnerable to termite infestation and rot, which may result in future expenses. On the other hand, steel frames offer greater durability but cost more.

Windows: The key to comfort and savings

While the initial cost of investing in premium windows, such as double-glazing, may be higher, consider the long-term energy savings that also may reduce external noise. After all, achieving optimal indoor comfort is contingent upon the thermal and sound-proofing performance of windows.

Tiles: Balancing aesthetics with functional suitability

Choosing tiles involves consideration of both their visual appeal and functional suitability. Opting for quality tiles that are specifically designed to meet the demands of particular conditions and purposes, such as moisture-resistant wall tiles for damp areas or durable floor tiles for high-traffic zones, can result in significant cost savings over time by reducing the need replace tiles.

Although premium tiles may come at a higher initial investment, they can prove to be more economically advantageous in the long term.

Fittings and fixtures: Touches that make your house a home

Fittings and fixtures make the touches that transform your house into a home.

These include lighting, door handles, faucets, cabinets, built-in wardrobes, among others. Not only do they contribute to the overall aesthetics of your home, but they also enhance its functionality. Despite appearing as minor details in comparison to the larger scope of building your home, they accumulate in cost if not adequately budgeted for in advance.

Prioritising and allocating a budget for fittings and fixtures early in the planning process is imperative. By doing so, you can avoid last-minute compromises on quality or style, ensuring that every aspect of your new home aligns with your vision and requirements.

Plumbing: More than just pipes

Options for plumbing materials are typically limited to copper, PEX, PVC, and CPVC, each with its own pros and cons including durability, cost, and ease of installation to resistance to corrosion, temperature adaptability and lifespan.

While copper pipes used to be the gold standard for their durability, PVC pipes have emerged as a more hygienic and cost-effective alternative that offers superior longevity.

So investigate and consider your plumbing options as the material you choose can influence both upfront costs and long-term maintenance expenses.

Roofing: More than just cover over your head

Selecting the appropriate roofing material is not merely a matter of aesthetics; it is a functional decision that affects the long-term value of your home. Investing in high-quality roofing can provide long-term advantages in terms of durability, energy efficiency, and reduced maintenance.

In Australia, the most common roofing materials are metal roofing, terracotta and concrete roof tiles.  Each material has its own cost, durability, and maintenance considerations. Although concrete roof tiles may be cost-effective, it frequently necessitates more maintenance, whereas metal roofs are more durable but require a higher upfront investment.

Technology: Future-proof your home

In today’s rapidly advancing digital age, your home should be equipped to handle more than just traditional utilities. Plan for pre-wiring or conduits for both existing and future technologies. Neglecting this may result in costly retrofits, which may require tearing down walls or ceilings to accommodate new technology.

Consider the budgeting aspect of integrating smart home technologies. While these technologies are becoming increasingly affordable, higher-end options can significantly inflate expenses. Account for these costs when estimating building expenses. This foresight ensures that technology can be seamlessly integrated without compromising the overall design and functionality of your home, transforming it into a comfortable living space and a state-of-the-art sanctuary.

Landscaping: More than just a finishing touch

Landscaping is more than just a finishing touch to your custom-built home and must be taken into account in your budget.

As a rule of thumb, your landscaping budget should be between 5 to 10 per cent of your home’s value. So, if your home is worth $800,000, for instance, you should put between $40,000 and $80,000 aside for the project.

Landscaping can be done in phases. So, consider starting with essential grading and drainage, and then progressively add elements as your budget allows. And remember, living in your home first provides an opportunity to gain a deeper understanding of your ideal outdoor space.

Final thoughts: Plan and budget for your custom-built home

Plan meticulously. Budget strategically. Build practically.

The process of building a custom home requires decisions that will impact not only the aesthetics of the home, but also its durability and efficiency. Each decision, ranging from the selection of land and orientation to materials and construction methods, carries financial implications. Plan meticulously and budget realistically, while prioritising quality and longevity for long-term satisfaction and cost-effectiveness.

Seek guidance from experienced professionals to avoid potential pitfalls and ensure that your home is both a dream to live in and a valuable investment for the future. In the emotional journey of building a dream home, strike a balance between sentiment and practicality, aspiration and limitation.

Ultimately, a custom home is a lifetime investment, a legacy, and a place for countless future memories. Wise planning, careful budgeting, and quality construction are imperative to transforming your dream home into reality.

Robert Suric, IDEA Constructions

By Robert Suric

As the director and founder of IDEA Contsructions, Robert is a highly-regarded and experienced reidential and commercial builder. Robert has spent more than two decades working across all facets of construction and developed an extensive range of building projects. His portfolio includes award-winning projects, namely the 2021 HIA Victorian Housing Awards (Victorian Custom Built Home up to $500,000), the 2020 HIA Victorian Townhouse/Villa Development Award (up to $500,000 per dwelling), as well as finalist of the 2022 HIA Victorian Townhouse/Villa Development Award (up to $500,000 per dwelling).