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Townhouse Building Costs: A Comprehensive Guide


Townhouse Building Costs: A Comprehensive Guide

Cost of the Building in a townhouse increased sign

Melbourne, the vibrant capital of Victoria, Australia, has been witnessing a significant increase in the demand for urban housing. As the cityscape evolves, townhouses have emerged as a popular choice for many prospective homeowners. Offering a blend of modern living and urban convenience, townhouses have become an attractive option for individuals and families alike. However, before embarking on the journey of building a townhouse, it is essential to understand the costs involved and various factors that influence the overall expenditure. Additionally, it is crucial to consider the design and layout of the dwellings, ensuring that each unit provides ample living space and parking facilities for residents.


What Is a Townhouse Exactly? The Defining Features and Purpose

Townhouse discussion interior designs by Toak Projects

Townhouses are multi-story residential properties that share one or more walls with neighbouring units. They are designed to optimise space and promote a sense of community living while providing homeowners with individual ownership. Townhouses often come with shared amenities and common spaces, offering an urban lifestyle with a touch of privacy.

The Advantages of Living in a Townhouse

Townhouses offer several advantages, making them an appealing choice for potential residents. These advantages include:

  • Affordability: Townhouses generally offer a more budget-friendly option compared to detached single-family homes.
  • Low Maintenance: With smaller yards and shared common areas, townhouses require less maintenance than standalone properties.
  • Community and Security: Living in close proximity to neighbors fosters a sense of community, and shared walls can provide an added layer of security.
  • Location: Townhouses are often situated in well-established neighbourhoods with easy access to amenities, schools, and public transportation.

Factors to Consider Before Building

Before commencing the construction of a townhouse, several crucial factors must be considered:

  • Location: The choice of location plays a significant role in determining the cost. Desirable neighborhoods may come with higher land costs.
  • Design and Layout: The architectural design and layout will impact both the overall cost and the final living experience.
  • Regulations and Permits: Building regulations, permits, and other legal requirements should be accounted for in the budget.

The Cost Components of Building a Townhouse

Planning Interior and costs arrangement

When estimating the cost of building a townhouse in Melbourne, it’s essential to break down the expenses into various components:

To give readers a general idea, the cost per square meter of a standard finished townhouse in Melbourne is around $2,530. Meanwhile, those opting for a high-end finish, are charged $2,910 square meter.

As townhouses tend to be built at around 150 square meters, the total price would fall within the range of $380,000 to $437,000. 

It must be stressed however that this is just an estimated range. Given that there may be other elements that would factor into the build, the price could go further up. 

This is worthy of note as Melbourne boasts a status as one of the world’s most popular cities to reside in. As homeowners and property investors already know, when demand overtakes supply, prices are bound to climb.

Apart from the global lockdowns, townhouse prices have been driven higher due to volatile exchange rates and issues in the supply chain. This led to townhouses in Australia’s more viable areas selling for more than a million. The current average inches closer to $700,000.

While Melbourne’s popularity impacts the total cost of building a townhouse, the prices still vary among suburbs and in the general area. These are the factors to consider:

  • Townhouse Size

It’s a simple concept: the bigger your new home, the more materials you’ll need, and subsequently, the larger your budget.

In fact, according to the Urban Development Institute of Australia’s 2021 State of The Land report, the median lot price in Melbourne landed at an astounding $319,000, whereas Sydney topped the list at $495,000.

  • Build Quality

The quality of the materials and how good the townhouse looks overall when delivered also factor into the total cost. That said, if you desire a custom build or a high-end one, you will have to spend handsomely for it.

Logically speaking, expensive finishes demand top-tier workmanship, thus increasing materials and labour costs. As this is the case, aspiring homeowners who want their high-end homes to be built from the ground up, must expect to pay around $2,500 for every square metre.

  • Transportation Accessibility

The location, transport links, and local schools have a significant impact on the desirability and price of a property, thus affecting the cost of building a house.

  • Building Site

The site costs, namely fences, surveys, and utility connections, bear an impact on the townhouse’s total price. Additionally, factors like the slope of the land, soil conditions, and flood-prone areas will also affect building costs. 

It is important to note that sites with poor soil quality, significant slopes, or a high risk of flooding will result in higher building costs.

  • Projected Delivery

The location, site conditions, and local laws are also held as determining factors to the entire cost. On top of these, the projected delivery of the build is of great consideration. Suffice it to say, fast builds entail premium pay.

  • Project Complexity

Building complexities such as the number of levels and bedrooms are also held as key cost components in a townhouse building project. For instance, building three-level townhouses entails greater work compared to building a one-level and two or three bedroom home

  • Labour Costs

Naturally, the service provider you will be working with comes with a fee. Depending on their experience and calibre, the charge that comes with the builder who would take on your project may either be affordable or astonishing. 

It would be wise to perform research prior to enlisting a builder. Look at the building company’s experience, years in the industry, and the clients it has worked with. Assess the reviews they have received with their relation, of course, with what they charge and the service quality the clients have received. As an industry standard, full-time builders typically charge around $75 per hour. And remember, a builder’s advertised base price is generally only a starting point and the cost of construction of your home when it’s 100% completed. Additionally, it’s important to consider the quality of finishes when estimating the cost of building a house. The cost of building a house can vary widely depending on factors such as location, size, and the quality of finishes used. , and the time of year. So how much can you expect to pay? In April 2022, the figures from the ABS suggested that, on average, building a home cost around $473,000 (including houses and unit data).

Additional Costs 

Real Estate Talk costs with calculator and house miniature

Aside from location, materials, building complexity, and manpower, there are other costs that every aspiring homeowner must know. The following costs are payables that are tied to the country’s laws.

  • Licenses, Permits, and Legal Fees

As with any other region in the country, to build any form of structure, aspiring homeowners must apply for permits.

You would also need to pay for related legal costs, licensing, and other connected expenses depending on the scope and complexity of your project.

You must obtain specific licenses, for instance, if you want to construct a pool or install an air conditioning system in your new home.  

  • Land Cost

In Melbourne, the average cost per square meter of land is close to $900. This price may change depending on the location, size of the lot, and whether or not you’re building on top of an existing structure.

In Australia, the cost of land makes up around 10% of the average cost of building a home.

  • Site Preparation

Certain changes must be made to the site even before construction commences. There can be extra building charges for demolitions and clean-ups if the property’s present owner employs a landscaping business.

Site preparation charges must be included on top of the typical price to build a new house if you intend to do all these taxing activities yourself rather than hiring your usual builder.

  • Stamp Duty

The cost to construct a home in Australia is also influenced by regional state tax regulations. When buying a new home, you must pay stamp duty, which is determined as a percentage of the land price or transfer value.

One of the few positive effects of the COVID-19 pandemic is that it has prompted many jurisdictions to provide sizable stamp duty reductions.

The Cost of Building a Townhouse From The Ground Up

Money in Real Estate by Toak Projects

The average construction cost for building a brand new townhouse in Melbourne is pegged at $2,720 per square metre, which is higher than the national average cost for building a single townhouse. Note that this is still a rough average and it is already made apparent, the prices can vary depending on the quality of the build, viability of location, and the rest of the aforementioned. BTW I am currently doing 3 bed, 3 bath, single garage townhouses which are 125 sqm, in a location where the builld costs $1,800-$2,000 per sqm turnkey. 200 sqm may not be the optimal size, even if you can fit them on the block. For me it makes the difference of a 40% profit on costs at 125 sqm, whereas probably no profit at 200 sqm. Of course, several other factors could affect the final cost of constructing townhouses, such as the availability of materials, labor costs, design choices, and the involvement of a volume builder. It is my experience that an allowance of $1,500/m2 (inc. GST) is reasonable. To budget anything less is likely to end in heartache. All that said, commendations for having a crack, and all the best with the project.

However, if professing homeowners want to have a townhouse constructed in a new housing estate, no additional costs will be charged.

Townhouse Building Costs in Victoria, Australia: Navigating Timeframes and Renovation Factors

When considering the development of townhouses in Victoria, Australia, it’s crucial to understand the various elements that influence building costs. This understanding is not just about the immediate expenses but also about the broader context of timeframes and renovation considerations.


Timeframes for Townhouse Construction

One of the primary factors affecting the cost of building a townhouse in Victoria is the timeframe. Construction timelines can vary significantly based on several variables, including the complexity of the project, the availability of materials and labor, weather conditions, and any unforeseen challenges that may arise. Typically, a straightforward townhouse project might take anywhere from 12 to 18 months from groundbreaking to completion. However, if the project involves intricate designs or custom features, this timeframe can extend, impacting the overall cost.


Renovation: A Cost-Effective Alternative

For those looking to enter the townhouse market in Victoria with a more modest budget, renovation of existing structures can be a cost-effective alternative. Renovating an existing townhouse can dramatically reduce the overall costs compared to a new build. This approach allows for more control over the budget, as renovations can be staged over time, spreading out expenses. However, it’s important to conduct a thorough assessment of the existing structure to avoid unforeseen costs that can arise from hidden issues like structural damages or outdated plumbing and electrical systems.


Regional Variations in Victoria

It’s also worth noting that building costs can vary significantly within Victoria itself. Factors such as the specific location within the state, land value, and local regulations can all play a role in determining the final cost of a townhouse project.

Understanding townhouse building costs in Victoria involves a multifaceted approach that takes into account the timeframes for construction or renovation, as well as regional cost variations. Potential builders and renovators should conduct comprehensive research and seek professional advice to accurately budget for their projects, ensuring they are prepared for all scenarios in the dynamic world of property development.


Live In Style, Live in a Townhouse In Melbourne

Townhouse in Melbourne 

Building a townhouse in Melbourne offers a wonderful opportunity for property development and to embrace modern urban living. However, it is crucial to understand the costs involved in property development and carefully plan the budget to avoid any financial hurdles. By considering various factors and cost-saving strategies, aspiring homeowners can embark on their journey of building a townhouse with confidence and ensure that they are heading in the right direction. It’s important to come to a good understanding with your builder around the fixtures and fittings to ensure the quality of your townhouse

Is a townhouse a part of your residential options? Reach out to Toak Projects for a free consultation.



Are townhouses more affordable than single-family homes in Melbourne?

Townhouses are generally more budget-friendly than detached single-family homes, making them an attractive option for homebuyers in Melbourne.

What are the advantages of living in a townhouse?

Townhouses offer advantages such as affordability, low maintenance, community living, and convenient locations close to amenities.

How can I estimate the total cost of building a townhouse?

To estimate the total cost, consider factors like land costs, design fees, construction materials, labour, permits, and additional features.

What are some cost-effective strategies for townhouse construction?

Cost-effective strategies include optimal design, value engineering, sustainable practices, and bulk purchases with negotiations.

How does the real estate market in Melbourne influence townhouse construction costs?

The real estate market, affected by supply, demand, and economic factors, can impact construction costs and property prices in Melbourne.