The Cost to Build a Townhouse in Melbourne

A townhouse is a multi-storey terraced residence. They share walls with the home(s) on either side but have their own front door. 

The main benefit they offer over detached houses is they are usually cheaper- the savings from those shared walls get passed on to you! Many also prefer the closer sense of community they can offer (boosted further by the ones that include playgrounds, swimming pools etc. in their common areas).

Costs associated with building a townhouse include the price of purchasing the land, builders and labour costs, construction cost, the cost to demolish or rebuild any existing structures on the land (if applicable), council fees, landscaping, and decorating.

From building costs to materials, insurance, and design, in this article, we explore how much it costs to build a townhouse in Australia.

The Average Cost of Building a House in Australia

We’ll detail later in this article all the factors influencing the cost of a townhouse build, but as a rule of thumb, a basic finish townhouse will cost you in the region of $2,530/square meter; a higher-end finish, closer to the $2,910 mark.

With the average size of a townhouse being around 150 square meters, this gives a rough price range of $380,000- $437,000. 

But, these can only ever be averages, as many variables can have an impact. 

One is Melbourne’s status as one of the world’s most popular cities to live in. And when demand outstrips supply, prices inevitably rise.

The exact costs associated with the pandemic are still unclear, but what is clear is that it too has driven prices up (volatile exchange rates and supply chain issues being two of the main reasons).

The end result? It’s not uncommon to see townhouses sell for over a million in some of the city’s more sought-after areas! Averages land closer to $700,000.

Factors Affecting Cost of Building a Townhouse in Melbourne

Aside from the enduring popularity of the city itself affecting the cost, they vary between suburbs, as well as within the broader area. “Location, location, location!” holds true, as ever, but the average cost of building a townhouse can be affected by many factors. The most common ones are:

• size of the house
• quality of build
• accessibility to transport
• site consideration
• desired time of completion
• the complexity of the construction project
• builder and labour costs

Let's explore each one in greater detail.

Size of the House

The size of the property greatly impacts the price of the entire house-building project in Australia. It’s common sense: the bigger your new home, the more materials you'll need, and the bigger the budget.

According to the Urban Development Institute of Australia’s 2021 State of The Land report, Melbourne’s median lot price was $319,000 (with Sydney at $495,000!).

Quality of Build

The average cost of building a house in Australia also depends on the materials' quality and how good it looks when finished. If you want that high-end finish or custom build, you’ll have to pay for it!

Expensive finishes require better workmanship, which will increase the costs of materials and labour. On average, plan to spend around $2,500 per square metre for a top-quality build.

Location and Accessibility to Transport

The cost of building a house also depends on the property's location, transport links, local schools, etc. All of these have a significant impact on the desirability and, thus, the price of property there. 

Site Consideration

Site costs such as utility connections, fences and surveys will impact the price.

Then factors such as the slope of the land, soil conditions, and how flood-prone the area all affects the building costs. Sites with poor soil quality, significant sloping or areas prone to flooding will result in higher building costs.

Desired Time of Completion

Construction can take anywhere from a few months to over a year, depending on which state you live in and other factors like site conditions and local laws. However, the desired time of building a property can also affect the construction cost. If you need your new house sooner than the average completion time (6-12 months), you CAN get super-fast builds, but you will pay a premium.

The Complexity of the Construction Project

The build cost of a home in Melbourne is also affected by the complexity of the construction project. For example, building three-level townhouses is more complex than constructing the average 2- or 3-bedroom home. 

More time + more materials= higher price.

Builder and Labor Costs

Your construction costs will also depend on the service provider you choose. Do some research beforehand on which companies can provide a better value for money. But, “you get what you pay for”, my old man never tired of telling me. And I think he was onto something. 

Skimping on build costs can be a false economy.

When researching property development companies, always consider reviews from past customers. And, when it comes to the pricing, a full-time builder will charge around $75 per hour on average.

Keep reading to find out which other costs to expect besides these most common development and build costs.

Additional Costs for Building a House in Melbourne, Australia

Building a house doesn't only include buying the materials and paying the construction workers. You also have to watch out for some other costs people usually don't consider when planning their budget for constructing a house.

Land Cost

The median price per square metre of land in Melbourne is around $900. This cost may vary depending on factors such as location, size of the plot, and whether you're constructing over an existing structure or not.

Land price accounts for about 10% of average house building costs in Australia.

Stamp Duty

The price to build a property in Australia also depends on local state tax laws. Stamp duty is a fee you have to pay when purchasing a new property, and it's calculated as a percentage of the land price or transfer value.

One of the COVID-19 pandemic’s rare silver linings is that it has led many states to offer significant discounts on their stamp duty.

Permits, Licenses, and Legal Fees

You will need to apply for permits to build any kind of structure.

Depending on the size and complexity of your project, you may also have to take care of the related legal fees, licenses, and other related expenses.

For example, if you plan to build a pool or install an air conditioning system in your new house, you need to get the relevant licenses. Something else to keep in mind when organising your budget for building a property.

Site Preparation

Even before you start building, you will need to make some changes to the site. If the property's current owner has hired a landscaping company, there may be additional construction costs for demolitions and clean-ups.

If you don't want to use the services of your average builder but instead plan on taking care of all these tiring tasks yourself, you need to add site preparation costs on top of the average cost to build a new house.

Now that we've covered the average cost of construction and all the other potential fees let's focus on townhouses and their costs specifically.

How Much Does It Cost to Build a Townhouse from Scratch?

A townhouse is a property that has more than one floor. It includes at least two bedrooms, has its own front and back door, and the backyard is shared with the other townhouses in your community.

You can expect average construction costs of $2,720 per square metre for building a brand new townhouse in Melbourne. But- and I’m sure you can guess what's coming up!- that’s only the roughest of averages. Prices can vary wildly according to the quality of the finish, the popularity of the location and the rest of the factors we went through above.

If you plan to build a townhouse in a new housing estate, you shouldn't expect any additional costs.

What Are The Costs for Townhouses by Australian Cities?

Are you interested in a confident price of your new home? There are cost calculators available online to help you estimate a close cost of the property you are planning to build.

How Can Eastbound Builders Help You?

Father-and-son team Jeff and Logan Wang are at the heart of Eastbound Builders. Founded in November 2014, Eastbound Builders now builds 55+ homes a year. The company has 22 full-time employees, 35+ proven and trusted subcontractor teams, and new facilities in South Yarra.

Eastbound Builders offer free consultation calls and will help you get a cost estimate in less than a minute!