Expert Advice: How to budget for your new build, with Pete Boehm

  • 5 minutes
  • 9 October 2019

With more than thirty years’ experience in the banking and financial services sectors, Pete Boehm is a chartered accountant with an extensive knowledge and understanding of Australia’s consumer finance, home loan and property sectors. His experience has provided valuable insights into the challenges and opportunities today’s homeowner face, from a first home buyer to a seasoned property investor. Recently, we had the opportunity to get some insider tips on how to budget for your new build.

Expert Advice: How To Budget For Your New Build with Pete Boehm | ModularWalls

Q. Where would one begin with pulling together a budget for a new build?

The starting point is to work out how much you can afford. And this is a combination of how much you’ve saved, and how much you can borrow. Remember, it’s no good setting your heart on a $700,000 new build, if you can only afford $500,000.

Once you’ve worked out how much you can spend, you then have to determine what your purchasing power will allow you to build. And this depends on many factors:

  • Where you’re building (building costs vary from state to state, and region to region and can vary due to other factors such as land size, slope and shape)
  • How large a property you’d like (square meters, single or double story)
  • What type of design of home you want (materials, aesthetics, structure)
  • The builder you choose (how much they’ll charge you)

A good starting point is to do some research and work out what the average cost per square meter is in the location you want to build in, and then use this as a yardstick to measure building quotes you’ve been given.

For example, if you wanted a 250 square meter house, and the applicable average cost was $2,500 per square meter (for say a home in the mid-quality range), then the build cost you’d need to budget for would be 250 x $2,500 = $625,000.

You can use this approach to flex your budget up or down by varying the house size, or quality of materials used, until you come to a build type you like and can afford. It’s also a good way to compare your new build to existing homes in your area, to help ensure you’re building to the right standard and not over-capitalising.

And remember, when it comes to the detail of your budget, there are a number of key costs to consider, such as how much you’ll need to pay for the land, the quality of fixtures and fittings, the build cost, site cost and other things like stamp duty, conveying costs and finance costs (upfront and ongoing).

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Q. What percentage of the budget should be allocated to the outdoor areas?

Unless outdoor areas are included in your new build contract, you’re going to have pay extra if you want to develop and add value to your new front and backyards.

And it can be an expensive exercise! For instance, you can spend extra on things like: a swimming pool (by far the biggest extra expense); a spa (another big expense); a patio; retaining wall; outdoor kitchen and garden area; pergola, and garden landscaping (including design, soil and perhaps even a watering system). And garden landscaping can be extremely expensive depending on the size and location of the gardens, and the size and maturity of the plants selected.

Q. Are there any ‘hidden costs’ that people should be wary of?

When we talk of hidden costs, we talk of unplanned costs. This can be a particular risk for the first-time builder, or those who haven’t entered into a fixed-cost build contract (where the risk of cost increases is largely borne by the builder).

The types of hidden costs which may occur include things like:

  • Soil contamination surveys
  • Cost arising from time delays (e.g. inclement weather, council issues, supply issues)
  • Unbudgeted finance and conveyancing costs
  • Design changes (e.g. choosing more upmarket fixtures and fittings)

Q. Where are the common ‘blow-out’ areas that people should look out for?

Major drivers of cost blow-outs include:

  • Contracting on a ‘time spent’ basis rather than a fixed price; meaning the longer it takes, the more you pay.
  • Making major design changes during the project or deciding on more expensive fixtures and fittings.
  • Poor quality quotes, which do not accurately reflect the true build cost and may result in errors or inaccuracies, adding cost and time to the build.
  • Lack of planning; not spending enough time researching to ensure you have what you want where you want it.
  • Choosing the wrong builder or trades-person, resulting in poor quality work and needing to replace the builder during the project.

Who is Pete Boehm?

Pete Boehm was the former Finance Editor for, former leading columnist with yahoo!7 Finance and author of ‘The Great Australian Dream: A Guide To Buying Your First Home’. He is widely quoted in the Australian press on all matters relating to home ownership, property investment and mortgage finance. Pete also holds a portfolio of directorships in Australia, and a Fellow of the Financial Services Institute of Australasia and the Australian Institute of Company Directors.