Is it Cheaper to Custom Build?
Updated: Dec 14, 2022
If you are planning to build a new home, you probably already know that it is quite an expensive process. However, you still want to ensure you are spending your money wisely and getting the most from your budget. You also want to make sure you avoid unnecessary expenses and are getting good value for your money.
As your builder will be one of your biggest expenses, this is an obvious area to look for savings. Builders’ fees can also vary wildly for what appears to be largely the same quality and scope of service. This begs the question, when it comes to choosing a builder, what is your cheapest option?
Here we will try to answer this by examining the different types of builders and the services they provide. As part of this, we will explore how build costs are calculated and compare the cost structures of different builders. We will also share our advice on easy ways to reduce the build cost of your new home.
Different types of new home build
In Australia, there are two main types of builders to choose from – volume home builders and custom home builders.
As the name suggests, volume builders are focused on getting through as many projects as possible as quickly as possible. To help speed up their design and build process, they usually have a catalogue of set designs they work with. This allows them to streamline their activities and easily move teams from one project to the next.
The standardised approach adopted by volume builders also helps keep the cost of materials and labour down. To give you some choice, most volume builders offer a range of customisations, including different colour schemes and material palettes. Additional customisations may be possible but will generally incur variation fees, adding significant costs to the build.
Custom home builders, on the other hand, specialise in creating bespoke designs tailored to the site, your family, and your lifestyle. As a result, they tend to take longer to complete projects and deliver a smaller number of developments each year. They may also need to work with unusual materials or building techniques to create the unique design you are after.
Many custom builders also provide an end-to-end service, meaning they support you through the entire design and build process. They also tend to use the same team for all of their projects, bringing in specialists as required. This helps streamline the development schedule, making moving between the different stages much easier and less stressful.
Factors that affect the cost of a home build
Estimating the exact cost of a new home build can be difficult as there are many variables to account for. Some of the main things that need to be considered include the:
Size of the home: Put simply, the bigger the home you are planning, the more it will cost to build. This is because the more floorspace you want, the more material will be required to enclose them. Larger homes also tend to take longer to complete, which usually means more tradespeople and higher labour costs.
Style of the home: Some design styles are more ornate than others and will generally cost more to build. For example, French Provincial homes are known for their decorative details, which can be expensive to get right. Modern home designs tend to be more minimal, so they should be more cost-effective to build.
Complexity of the design: Further to the previous point, the intricacy of your design will usually reflect the building work required. As such, unusual shapes or complicated architectural features in your plan will usually come with a higher price tag. This is another reason why simpler styles, like modern home designs, are often cheaper to build.
Quality of finish: Achieving a high-end feel generally requires close attention to detail, more expensive materials, and a skilled builder. As such, the more luxurious your new home plans, the more they will cost to bring to life. This is particularly true if you include any non-standard materials or features in your design
Location of the site: The more remote your build site, the further materials and trades will need to travel to get to it. As such, it usually costs more to build in a regional or rural location than in a more populated area. Similarly, if your site is difficult to access, this is also likely to add to your build costs.
Condition of the site: If your site has any major quirks, like an odd shape or steep slope, this could impact your build cost. This is because additional design work and specialist build techniques are often required to overcome such issues. Similarly, if your site needs to be cleared or levelled, this will also need to be factored into your build budget.
Who costs more – a custom builder or a volume builder?
As a general rule, a volume home builder’s base price will usually be lower than a custom home builder’s. That said, this statement has a number of important caveats.
Most significantly, the base price a volume builder advertises is unlikely to be what you end up paying. It is also unlikely to be what their display homes, and the properties pictured in their marketing materials, really cost. This is because most volume builders’ base designs are basic and require at least some upgrades.
Many volume builders will also actively discourage you from making too many changes to their set design. They usually have their list of allowable customisations, like minor floorplan adjustments, but will not allow any other alterations. Or, if they do, they will charge variation fees which have a significant cost to the total build budget.
As such, if you have specific ideas in mind, a custom home builder could be the most cost-effective choice. They will be able to work with you to flesh out your thoughts and tailor a design to suit you. They will also base their price on the elements of your design, not how much it deviates from their design.
A custom home builder will usually be cheaper if you are planning to knockdown and rebuild an existing home. While site remediation is an important part of the knockdown and rebuild process, most sites will still have some issues (easements, significant trees, etc.). Many volume builders will not accept jobs with these conditions or charge a premium for variations from their set design.
By contrast, a custom build allows you to plan around site issues, like a sloping block, generally without blowing out your build budget. If local development schemes require it, a custom home can also be designed to work within the existing building footprint. This can save you a lot of time, money, and stress when you reach the planning approval stage.
It is also worth noting that if you have specific requirements, you should generally opt for a custom home, especially if you plan to build a dual occupancy. Building custom allows you to make these the focus of your design and ensure your new home fits your lifestyle. Similarly, if you are after a specific style, like a French Provincial home, a custom builder could be best.
Tips for keeping your custom build costs down
When planning a custom home, there are a few easy things you can do to reduce your build costs. This includes:
Using space efficiently: As noted above, all additional internal space comes at a cost, so wasted space is wasted money. With this in mind, when designing your new floorplan, think carefully about how you will actually live in the space. And, if there are areas that you will rarely use, consider cutting them from your design.
Finalising your plans before starting to build: While custom builders are more flexible, they will still charge variation fees if you make changes after building works start. As such, you should not proceed to the build stage until you are completely happy with your plans. And, if issues arise during the build, you should work with your builder to plan the most cost-effective solution. Check out our design process >
Focus your spending on structural elements: A custom build allows you greater control over where you spend your money and where you cut costs. With this in mind, if your budget is limited, you should prioritise getting the structure of your new home right. You can then easily upgrade the fixtures and finishes once you have the money to do so.
Leaving room for future development: If you are likely to need more space in the future, you can plan your design to allow for expansion. For example, if you plan to grow your family, you could start with a smaller footprint and then add on. If you do choose to do this, it is generally best to seek approval for the whole development upfront.
Want to discuss this further?
If you are considering building a custom home, but are worried about the cost, give Carmel Homes a call. Our experienced team are expert in helping homeowners develop bespoke designs tailored to suit their requirements and budget. Over the last 30 years, we have also built a reputation for high-quality construction and superior customer service.
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