Costs for Variations Compared with Retail Price

One area of annoyance for home buyers is when they want to vary something and the variation price is much more than the difference between retail prices.

For Example

An example is the builders standard oven may be $700 at your local discount store while the oven you want is $1100.

When you ask for a variation you may be quoted an extra $700 or more.

Even if you buy the oven and supply it to the builder he may only offer a cost reduction of $400 rather than the $700 you expected!


What’s the reason for the extra $300 over the retail price difference? . . . . . . .Well its not always the builder ripping you off.

A big builder is possibly buying over 100, or more of the same type of oven so he may be able to buy them direct from the manufacturer for less than $500.

When it comes to buying the different oven the builder is only buying one so he might be unable to get much if any discount.

The difference in price to the builder is thus around $600. Even if you buy the oven the builder only saves $500.

They may also have extra costs due to

  • Organising and administration of a single purchase,
  • Installation costs because the different oven may not build into the kitchen cupboards as easily as the builders standard oven.

I hope this helps you understand that some ‘additional’ costs can sometimes be justified.

The Entertainer

“Just the thing for Entertainment” or something similar is a common theme in house builder’s brochures and estate agent descriptions.

It’s really a way of trying to upsize you into a bigger (more expensive) house.

Before you get sucked in with these statements for your new house here are a few questions you need to ask yourself:

  • How often do you actually “Entertain”?
    • Every week?
    • Once a month?
    •  Or hardly ever?
  • Will you be trying to impress. . . . or just aiming to have a good time?
  • How many is it really going to be?
    • Is it going to be one or two couples around for brunch or dinner or;
    • A party for 30 or 40 people?
  • Is a barby your normal way of entertaining? It is for most Australians. . . . .In that case you are more likely to need plenty of outdoor areas, which probably include plenty of space for children to run around. . . . .Not easy if you have filled your block up with a house that has big rooms for “Entertainers”.
  • For family occasions most people won’t mind if the garage is pressed into service for a meal if it is presentable. If it isn’t perhaps you can just cover the front of the shelves with some fabric.
  • Think back to the parties you went to that you really enjoyed. Some of the better ones that I went to were in small houses and flats. . .  you would normally find me, along with half of the other people there, packed into a tiny kitchen.

Alternatives for Entertaining

When our children were young we used to live in small houses so when it came to birthday parties we used to hire a village, or community hall.

You can normally hire a big room including a kitchen for half a day at very reasonable rates.

That meant lots of room for kids to run around and play games.

You don’t need good weather.

Just put paper tablecloths on the provided trestle tables, afterwards roll it up with the paper plates and plastic cutlery and in the bin.

No worry about damaging your carpet, just brush the floor and mop any spills and go home.


What are some of the parties you have enjoyed and what was the place were you held them?


Budget has more posts about finding a house the right size for you


Is Australian Housing Expensive?…. or Just Big?

You frequently see articles saying how expensive Australia housing is compared with other countries ……….But is this really true?

UK Houses

The last time I was in  England I had a look at some estate agents prices in my home town which is about an hours commute out of the major city of Manchester.

The typical price for a terraced house, of which there are thousands, is around 170,000 pounds. Now at the current rate of exchange that’s around $310,000.

So what do you get for the Money?

  • About 60 m2 of living space (around 6 square)
  • A block size of around 100m2 with a 5m frontage
  • Five smallish rooms consisting of living room, kitchen/diner, 2 bedrooms and a bathroom.
  • If you are lucky you may get a 2m setback which is a small garden at the front
  • Possibly a single colorbond garage which will practically fill the back yard.

Melbourne Houses

Lets compare this with a basic house about an hours commute out of Melbourne, say Dandenong.

For around $650,000 you could expect:

  • About 180m2 of living space (around 200square)
  • A block size of around 550m2 with at least a 12m frontage.
  • At least eight generous sized rooms consisting of lounge, family room, kitchen/dinner, laundry, 3 bedrooms, bathroom with separate toilet.
  • A 5m setback for a garden.
  • A built on brick garage with concrete driveway.


At three times the floor area and over five times the block size, for a bit more than twice the cost, an Australian House looks much better value.

If we want lower cost houses perhaps we should be asking for smaller homes rather than complaining about affordability.


Is our housing expensive, or do we just expect too much? …………..What do you think?

For similar posts see Budget

How Much House?

Do you know that in spite of the standard block getting smaller over the past 20 years the actual size of the houses has been getting bigger. The builders are doing a good job of selling us on the idea of more space.

There are three sizes of house you could buy:

  1. The size you need . . .. SMALL
  2. The size that you would like. . . . BIG
  3. The size that the builder wants to sell you. . . .ENORMOUS

Get a bigger house and it could blow your Budget. To keep costs in check you need to do some preparation. Here are some suggestion:

  1. Avoid starting by visiting show houses.
  2. Go through your existing house throwing away all the junk you haven’t used in the last year or two. You could even raise some money and have a garage sale.
  3. Measure the internal size of each room in your house, in m2 and think about whether that room needs to be bigger, or could be smaller.
  4. Don’t forget to include the wardrobes, the pantry, and the garage.
  5. Don’t measure the hallways but allow 15-20m2 for hallways and passages.
  6. Allow around 15-20m2 for internal and external walls.
  7. Decide what additional rooms you need, for example an extra bedroom if you have another child on the way.
  8. Add all the areas to get the total area of the house.
  9. You could also convert the sizes to Squares for easy comparison when looking at adverts.
  10. Start looking on the builders web sites or adverts for houses plans that are close to this size.
  11. When you are looking at plans use the dimensions you originally took for each room to get a feel for the room sizes.
  12. Only go and look at houses that are within the dimension you calculated, plus say no more than 10%.

To help I have prepared a Google documents Checklist which can be accessed from the link or the Checklist tab at the top of the page.

How have you made sure you haven’t finished up with a house that’s too big?

For posts about Costs see Budget

For Posts about Design see Floor Plans


Half Houses

Can’t afford the price of a new house?

How about half a new house?

This is a radical idea to help affordability of new homes by Chilean architecture company ‘Elemental’.

Basically they provide half a house fitted out; with the other half just having a roof.

This means you can complete the remaining half in your own time when money become available, and perhaps save money by doing some, or all of the work yourself.

To find out more check out :


For more Unusual Houses, and Fails, check out What the………………….?



Can You Afford the Display Home?

When you visit a Builders Display you will probably be given a price list which quotes the ‘Basic Price’ for the house you are looking at.

Don’t be fooled!………the features you see in the Display Home will add much more to the cost.

The following table provides examples of the cost of upgrades included in Display Homes around Melbourne in 2017 / 8




Base Price

As Displayed

Percentage Increase

Henley Properties

Ashbury 29 $ 253,900 $ 307,821 21%

Hallbury Homes

Montrose $ 277,900 $ 420,000 51%

Dennis Family Homes

Lakewood 333

$ 259,900

$ 417,400



Metro 325L

$ 338,100

$ 551,135




$ 460,700

$ 791,555



Osborne 454

$ 350,300

$ 618,032


All figures as published in the Melbourne Herald Sun December 2017- Feb 2018

Additional Costs

In addition to the displayed costs you might have to pay extra for:

To get some idea about how the costs can add up follow this link: What Will It Cost.

Also see

The Housebuyer’s Handbook- A How-to for Home Hunters

Guest Post by Hubert Dwight

If you are looking to buy your first home or even taking another step on the property ladder, the whole process can seem daunting and not a little terrifying.

The key to making the process as smooth and painless as possible is to be armed with as much information as you can find.  

Below we have tried to break down the process into a basic step by step guide to follow for those looking to purchase through private sale.

Step 1. Approach a Lender

Do this now so you can get an idea of:

  • How much you will need save
  • How much you can borrow based on your income/s and factoring in fees and charges you may not have thought of (see below)
  • What your repayments would be

Step 2. Work out your Budget

When working out your budget don’t forget the hidden costs associated with your purchase – these can be substantial.

Stamp duty, conveyancers, building inspections and a myriad of other cost can eat into your budget, so it pays to be forewarned.

Step 3. Write out your Checklist

Sit down and discuss what you NEED in a property and what you WANT.

Decide whether you want a new build or an existing property.

Remember new builds may save you on stamp duty, but may not have the infrastructure you require or desire.

Occasionally, you can find surprisingly well placed new developments close to the city.  

I recently came across Yarra Bend which is one of these new developments surrounded by long established infrastructure.

Step 4. Do your Research

If you are thinking of moving to a location outside your comfort zone, it is wise to do a bit of research to prepare you for any surprises.

Crime rate statistics are probably a good place to start if you don’t know the area very well.

Investigate sold prices published on online real estate sites, so you can get a feel for what you will get for your money, and what represents good value.

Step 5. Inspect, Inspect, Inspect

Even before you have done all the above it, pays to get a feel for the market.

Comparing properties and prices can give you an idea of where the best value for your dollar can be bought, and helps you narrow down what you’re really looking for.

Step 6. Find a Conveyancer

Even in the early stages of house hunting, it is a good idea to select a conveyancer.

Once you find one give them a call, introduce yourself, and let them know that you will be purchasing a house at some stage and will be making use of their services.

A good conveyancer will manage things behind the scenes, such as reviewing the Section 32, to make sure there are no anomalies along with the legal side of the transfer of ownership.

Step 7. Doing your Due Diligence

Property buying is a lot like falling in love.

Don’t be fooled though, what looks pretty on the outside may be hiding some ugly secrets.  

Make sure the first thing you do with any property you are interested in is ask for the Section 32.  

Once you have that forward a copy onto your conveyancer and then sit down and actually read through it, looking for things such as easements which may run through the property and impede future development.  

Your conveyancer is best equipped to guide you through this.

Step 8. Making an Offer

When you have found your property and decided on a figure, your offer will then be written up by the agent to be presented to the vendor.

A deposit will then be taken, and legal documentation signed to make it official.

Things such as a settlement can also be negotiated at this time.

It is important to make your offer subject to any building and pest inspections, and also subject to finance.

This is crucial as new rule changes may have altered your borrowing capacity.You will be given 10 – 14 days to arrange inspections and get finance approval from your provider.

Step 9. Final Inspection

Should your offer be accepted, then both your lender and conveyancer will be notified of the transfer date and all you have to do is make your preparations to move.

About a week before the transfer, you should be allowed the opportunity to make a final inspection of the property to ensure everything is as it should be.

This would be a good time to get your insurances sorted out if you haven’t already done so.

Hopefully this brief summary has given you an overview of the process from start to finish.

Purchasing a property can seem like a confusing maze but taking your time, doing your research and choosing knowledgeable and experienced professionals is the best way to ensure your journey is a success.

Extra Rooms

Over the years I have seen many builders put up many reasons for making houses bigger and more expensive.

Here are some of the additions that you wouldn’t have found in many houses 30-40 years ago.

  • En-Suite
  • Walk in Robe
  • Rumpus Room
  • Study
  • Breakfast Room
  • Theatre Room
  • Parents Retreat
  • Butlers Pantry
  • Al-Fresco

Whether you ‘Need’ these rooms, or think they will improve your life is up to you. . . . just remember that for every extra room that puts up the cost of your house.

Low Bank Valuations

People building a new home are often shocked when their bank valuation is less than the cost of the land plus the build cost.

Problems With Low Valuation

The two issue are

  1. Unless your deposit is larger than the difference between the Final Cost and the valuation you will be unable to finance the build.
  2. Even if your deposit is enough to pay the difference you may find you have to pay  Lenders Mortgage Insurance which can add significantly to your payments.

Reasons For Low Valuation

The bank valuation is aimed at estimating how much the bank would be able to sell the  house for if you default on your mortgage payments. . . . . . They are not really interested in how much its going to cost you.

What interests the bank is how much roughly comparable houses are selling in the same area.

Here are some reasons why the Bank Valuation may be low:

  • Architect, or Custom Designed Homes – You may get the value for an individually designed home in an expensive suburb but in a typical subdivision, of mainly project homes, its less likely
  • Over Development – Putting too much house on a block can have a detrimental effect on value if you don’t have enough outdoor areas.
  • Bigger Than Other Houses – Valuers always have a difficulty in providing a valuation that is significantly higher than the median value of the suburb.
  • Too Many Upgrades – Watch the Home Shows and you can spend many extra thousands on Kitchens and Bathrooms which may add little to the value.
  • Overpriced Land – Watch out for Developers who offer cashbacks, pay your house deposit, or discounts for remaining blocks on the subdivision. What this generally means is that the original price was set above the true value.
  • Swimming Pools – As many people hate swimming pools as love them so you rarely get any additional value even if you have spent tens of thousands.
  • Market Downturn – Could be due to a local industry closing or a more general recession but its unrealistic to assume property prices will always rise.
  • Location – Recent floods or bush fires will have a negative effect on value.
  • Site WorksSloping Blocks, Building on Fill, or Reactive Clay; all can add costs which you may not get back.


What You Can Do

Banks are really allergic to high levels of risk so though you can try Option 1 and Option 2 below but you may need to resign yourself to Option 3!

  1. Contact the valuers to get some background to the reasons for the valuation, or even look to get your own valuation.
  2. Try other lenders
  3. Revise your expectations by cutting down the house size, and or upgrades.


Do You Need A Home Theatre?

I keep reading articles about issues with the affordability of Australian houses. . . . . but then find lot’s of you want a ‘Media Room’ in your new houses!

So how much is a basic Home Theatre going to add to the cost of your new house?

Room Size

Room size if you are going to get a big screen tv say 75″ or a projector the experts say you really need to be around 3m away from the screen.

That means you are talking about a 4m x 4m room.

At ‘say’ $1,500/m2 the room alone is going to cost you around $24,000.

Fit Out

Again looking at a fairly basic system I have allowed the following:

  • $6,000 – TV and sound system, cabling, etc
  • $3,000 – Furniture, carpets, and lighting.

Of course if you really want to go to town you could spend Millions!

Overall Costs

So your basic home theatre is going to cost around $31,000!

Assuming you borrow the money the payments, at a  long term average of 7% over 25 years, amounts to:

  • $54 per week.
  • $240 pr month.
  • $2,880 per year.
  • or $72,000 over the full term.

Don’t forget all this is going to be in addition to a large TV in the family room, and probably another couple of TVs around the house!

In Conclusion

Well it’s up to you but, I’ve got to 60 and don’t feel that I have missed out by not having a home theatre.

In fact instead of over committing on houses  I was able to put more into my Super means I am now semi retired!


Don’t Agree? . . . Leave a Comment!


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