Home Building Site – Cost Traps

Site costs provide one of the biggest surprises to anyone who is thinking of building a new home. It isn’t unusual for site costs to add up to a significant amount and on most occasions it is an often overlooked expense when deciding to build a new home. If you ask any builder they will say it’s the nature of their business, but it almost seems unfair for consumers to have to understand so much before they are able to make a purchase. I’m not sure any other purchase in the world has so many variables and hidden extras – even a trip around the world seems easier to organise and budget for. What’s more, it would seem a trip around the world will cost you about the same as your site costs alone.

So just why are site costs so high? Over recent years it seems more and more builders and allocating certain expenses under site costs that would have previously been deemed as ‘general building costs’ and included in the base house price. Items such as;

  • Bin hire
  • Builders site sign
  • Temporary fencing
  • Verge or footpath bond
  • Crossover fees
  • Surveyors re-peg & boundary wall set out
  • Tree removal
  • Limestone access track
  • Concrete pumps
  • Service runs (electrical, gas, water and phone)
  • Bobcat preparation and cleaning
  • Stormwater drainage
  • Fencing rectification work
  • Driveway preparation
  • Sundry labour
  • Demolition
  • Earthworks.

This has been brought about through builders trying to find ways of appearing to be more competitive in the marketplace and allowing them to reduce the ‘base house price’ so it reflects only the shell of the home. By lowering the cost, the overall square metre rate also drops which generates more inquiry towards their company from prospects who aren’t aware of the additional hidden site costs.

There is already so much confusion when potential buyers walk through a display home, from what is and is not included, but now there is another factor to consider which totally removes fair comparison between products on the market. Lately there has been an avalanche of two storey homes advertised in Perth under $300,000. The simple fact is, none of the builders can build that home under $300,000 after all relevant costs are added. In fact, some of the homes will increase by $20,000 before adding the cost of earthworks.

It would be reasonable for all builders to be encouraged to follow one method only, that is, what you see is what you get. While earthworks is still a quoted item, many of the other items listed above that can make it to the newly formed Site Costs pool could easily be built in to the base house price.

What can you do to ensure you know all the facts;

  1. Ask your builder to include all costs up front.
  2. Ask for a list of potential costs that may arise after the engineers soil test and site inspection.
  3. Read your building contract under provisional sums to know what can happen if the costs increase and how it will affect you.