how much does it cost to build a custom home

How much does it cost to build a custom home?

Generally the first question that is asked in a client meeting is how much will it cost to build a custom home?  In a similar manner to restaurant dining, the meals on the menu vary depending on ingredients.  Fresh crayfish mornay carries a higher price tag than burger and fries due to the base ingredients. The cost of building a custom home is effected by the constituents of: materials, labor and builders profit margin/markup.

Architectural design had infinite possibilities and variables which ultimately carry varying price tags.  Understanding the specific factors that impact how much does it cost to build custom home spans four areas.  The builder’s fee or margin/markup encompasses each of the four general areas.

• site
• structure
• scope
• specification

Which factors effect custom home build costs?

Globally, the 2020-2023 financial years saw excessive exponential growth in construction material and labor costs.  The significant cost increases were driven largely by government policies and industry wide shutdowns.  The plant shutdowns and revised occupational health and safety/OSHA policies resulted in reduced productivity and fewer participants.

These area costs are to construct the custom home only and don’t include the project’s soft costs.  Soft costs include: planning and building permit fees, geotechnical and survey fees, architectural and sub-consultant fees.

Site

The location of the site has an effects local price fluctuations, number of material suppliers, transport costs for delivery, buoyancy of labor market.  Initially, for architectural design purposes; construction costs are estimated on area (sq ft/sqm). Quantity surveyors and building estimators base their estimates on consensus pricing across the industry in a specific location.  Competition in the market can drive material or labor pricing down; while few market players inflate building costs.

Site costs contribute a significant portion of a building budget.  Your site is unique and will be proportionally priced against: FEMA designation, geotechnical conditions, planning, topography and stormwater design.

• FEMA designation: sites floodway or floodplain designation impact the custom home design location, finished floor levels and insurances.
• Geotechnical conditions: soil types with higher clay content require more concrete and increased steel to accommodate foundation movement.  Clay soils also require use of aerobic treatment units and rather than standard septic system designs.  The structural engineer may require bores should the site have deep layers of clay or peat.  Subsurface limestone or granite also impacts type of footing structure and the complexity of constructing the footings.  A recent project in the sandy dunes of the Pacific had the layers of decomposing seaweed found in the geotechnical samples.
• Planning: a building envelope of the title effects the custom home build location.  This in turn determines length of driveway and trenching for power/water/sewer which impact building budget.
• Topography retaining walls or load bearing columns are required if the lot is steep.  The amount of clean compacted fill behind the retaining wall and the cartage distance will determine the fill budget.
• Stormwater detention on-site requires installing costly concrete soakwells and trenching for PVC pipe with all materials transported to site.  Specialist plumbing labor to achieve inground grades requires higher labor rates.

Structure

The type of building system utilized for your residence effects the building budget.  Building systems like: timber frame, cavity brickwork, rammed earth, ICF construction, SIPS construction or steel frame carry differing dollar rates.  The footing structure is designed by the structural engineer and is a consequence of the geotechnical analysis.

Double story housing enjoys reduced area costs than large single story layouts due to having less concrete and steel footings.  Further, long complex exterior perimeter walls result in larger building budgets compared to square rectilinear housing.  This principle largely explains why cookie cutter housing has the same footprint and space layouts.  In contrast, complex design with long spans or cantilevers for columns and beams create a larger structural component budget.

Higher pitching points of walls create larger volume spaces which contributes to structural reinforcing and results with increased HVAC sizing.  The architect’s expertise of value engineering through design development is crucial to maintaining the structure within budget.

Scope

The total gross floor area of your custom home design directly determines budget.  At sketch design, the 3,750 sq ft/350 sqm area multiplied by the square foot allowance (say $400) determines the $1,500,000 budget.  The building budget is further refined with geotechnical and sub-consultant input during design development phase.  Should you decide to increase architectural area requirements increase through the design process; so too does the budget.

Specification

Client selections are documented in the architectural specification and often have a large impact on the budget.  We often evidence large fluctuations in contract price with client changes in material selections; benchtops, tiling, fixtures and fittings.  A client changed tiling selections to hand made Moroccan glazed clay tiles laid in herringbone format throughout wet areas.  The working drawings revision added $10,000’s to her building budget to supply and install tiling and also lengthened construction program.

Custom home build budgets markedly increase when clients revise standard specification items to high-end selections.  We evidenced this price action when a client changed her Miele appliances to Gaggenau post bid/tender process.  Revised specification selections by clients create large contract variations across: appliances, benchtops, cabinetwork, floor finish, HVAC, lighting and windows.

2025 has evidenced general market pricing at $200-$500 per sqft/$2,150-$5,380 sqm for custom home builds.  Is it time to ask an architect how much does it cost to build a custom home?