Everything is not what it seems in the world of comparing the cost of building a new home between different companies.
Many people considering a new home are convinced that if know how much a builder charges per square metre of floor area then it will be possible to work out exactly which builder is offering them the “best value”.
The reality is great deal more complicated.
For example, any number of homes with exactly the same fixtures and finishes may have the same floor area under roof, say 250 sqm, however depending on the perimeter length of the external walls and complexity of the roof, the real cost to build the cheapest home and the most expensive home can vary as much as 25%.
In simple terms, a box shaped home is the cheapest to build but not what everybody wants to live in. A home in a “u” shape will have a much greater external perimeter length than the box home and also have a more complicated roof – hence it will cost more even though both designs may have exactly the same floor area.
Another confusing element is establishing that an apples for apples comparison is being made rather than comparing apples with a water melon.
Some builders offer a price with no or minimal site cost allowances. This makes them look much cheaper than competitors but they then put these costs into the price as the sales process goes on. So the original “price” balloons by tens of thousands of dollars.
It is not only what the price includes that it is important, but also what the price excludes that is critical.
Another confusing area is working out that the inclusions, such as the appliances, door furniture and bench-tops, are the same. In some instances stone bench-tops may be included with European appliances with one builder while another is providing laminate bench-tops with unknown branded appliances.
In recent years there has been an influx of porcelain ware from countries which have lower levels of manufacturing quality and durability, so they contributes towards creating a lower overall purchase price for a home but may not be as long-lasting as established brands built in Australia and Germany.
Finally, it is an economic reality that companies that don’t charge enough eventually go broke. There are plenty of builders who under cost their prices in order to “buy” jobs to keep cash flown in the business. This is a major concern when you are building a house and your home is semi-complete and the builder goes broke. There will be many months of processes and delays until the insurance funds are released and a new builder is contracted to finish the home.
