Is it cheaper to build or buy a house?

Is it cheaper to buy or build a house?

Unfortunately there's no easy answer. It used to be fair to assume that building property was the cheapest option, but after construction costs have risen over the last few years that has changed.

The costs of both building and buying will depend on your location and the size and finishings of the property.

Additionally, each state has its own rules on what is eligible for concessions.

We've done a deep dive below at the data to look at what the figures might look like in several of the states.

It's also important to remember that building a house has its own challenges, from long construction times and limited availability of vacant land in established suburbs where people most want to live.

Expert insight: Why building not buying can make sense

"Building a new home can be significantly more cost-effective than buying an existing one. Leveraging various government grants and subsidies specifically for new builds can notably reduce costs, potentially saving you up to $35,000 and up to $100K for more established properties. Additionally, new builds offer the peace of mind of modern design, energy efficiency, and minimal need for immediate repairs or renovations, often making them a more financially prudent choice than established homes."

Shawn Waugh

Director, Stop Renting Perth

Estimating land costs

The first step is to work out the rough cost of land. Here we've used data from the UDIA state of the land report, which covers 6 major metropolitan areas of Australia. Unfortunately we do not have data for Tasmania or the Northern Territory.

We've also factored in stamp duty, including discounts for first home buyers.

^{Sources: UDIA State of the land report 2025, various government stamp duty calculators}

Estimating construction costs

Now that we have some rough estimates for land purchases, we also need to find average home construction costs. We can do this with data on average construction costs per square metre and average floor sizes of new houses.

^{Sources: ABS Building Activity; BMT Constructions Costs (*pricing for a medium-quality, 3-bedroom brick home, with regional cost variation factored in to the total construction cost)}

Total cost of building and land

Now we can combine the land and house construction estimates (and stamp duty) on vacant land to work out the full cost of building a house.

Cost of buying an established home

Now we can compare the figures above with the median costs of buying established properties in each city, plus stamp duty.

^{Source: CoreLogic Home Values Index, April 2025}

The stamp duties listed here are without considering any schemes. Many states provide stamp duty relief or concessions for first home buyers and the ACT has reduced rates for owner occupiers. You should check the stamp duty information for your state or territory.

On average, building a house is cheaper than buying

Now that we’ve crunched the numbers, let’s have a look at how the median costs of building stack up to the median costs of buying. All costs include stamp duty. The cost of building includes land purchase and assumes a first home owner concession on stamp duty where applicable.

In 2021, building was the cheapest option for every city apart from Perth. But now building is only the cheapest option in 2 places.

Now these figures are general estimates. They also don't take into account finishing costs for new construction. There could also be substantial variations depending on where you live and the availability of land packages and skilled labour. Some of this data may also go out of date very quickly, as the economic environment changes quickly. Experts are predicting that construction costs will begin reducing this year. But as a general guide, the table above shows that building and buying stack up very differently in different capital cities.

Deciding whether to build or buy?

The building versus buying decision is not just about cost.

While the cost of building versus buying is easily quantifiable, the decision has more to do with the kind of home and home-buying experience you're looking for.

Let's look at some pros and cons for both options.

Building a home

Buying a home

Frequently asked questions

• What are the hidden costs in building a home?

  Even if you budget for the labour costs and the materials, unexpected costs could still arise. These might include foundational issues, weather complications or changes related to the design. You should allow for a 10-15% buffer on your estimated costs.

• What are the additional costs I need to consider when buying land or property?

  When you buy land or property you'll need to pay costs like stamp duty. When you're building you may also need to pay for permits and insurances.

  If you're buying using a home loan then you'll have other costs to think about like government fees and charges.

To make sure you get accurate and helpful information, this guide has been edited by Jason Loewenthal as part of our fact-checking process.

Written by

Richard Whitten

Money Editor

Richard Whitten is Finder’s Money Editor, with over seven years of experience in home loans, property and personal finance. His insights appear in top media outlets like Yahoo Finance, Money Magazine, and the Herald Sun, and he frequently offers expert commentary on television and radio, helping Australians navigate mortgages and property ownership. Richard holds multiple industry certifications, including a Certificate IV in Mortgage Broking (RG 206) and Tier 1 and Tier 2 certifications (RG 146), as well as a Graduate Certificate in Communications from Deakin University. See full bio

Richard's expertise

Richard has written 639 Finder guides across topics including:

• Home loans
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Co-written by

Rebecca Pike

Senior Money Writer

Rebecca Pike is Finder’s senior money writer, with over 10 years of experience in mortgages and personal finance. A frequent TV and radio commentator, she frequently appears on Sunrise, A Current Affair, 9News, and Sky News, and contributes expert analysis to publications like Yahoo Finance and The Latch. Rebecca previously served as Editor of Mortgage Professional Australia. She has a Master’s degree in Journalism as well as ASIC-recognised certifications in Tier 1 Generic Knowledge and Tier 2 General Advice Deposit Products, which comply with ASIC guidelines. See full bio

Rebecca's expertise

Rebecca has written 239 Finder guides across topics including:

• Home loans
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