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Hidden Costs of Per Square Metre Pricing

When it comes to pricing up the build cost of a new home, an attractive low price per square metre may seem like a fuss free method of working out your overall cost. However the true cost of building a home is not related to floor area alone, and will vary significantly depending on different aspects of the home’s design.

At Kit Markin Homes both our new build and concept plan designs are based on the actual cost of building a specific house design and not on an arbitrary average, so you can be sure that you are getting good value for money and a realistic understanding of the true cost of building your home.

Often house building companies use a square metre (m2) rate to attract customers. But with home-building, you need to dig deeper to figure out what those rates actually include.

Some builders achieve those low square metre rates by excluding essential elements, like the cost of foundations, building consents and design fees or by compromising on the quality or quantity of features.

The myth of a standardised price per m2, can be misleading and clients often find that the final cost is much greater once all of the “extras” are disclosed. The difficulty lies in the fact that there is no common definition for what is included in that m2 costing. How then, do you accurately compare one company with another? Every building company has their own set of fixed and variable expenses, pricing processes, preferred suppliers and sub-contractors and each builder is an individual with their own set of priorities. This is why no two building companies will end up with the same or even similar price.

When looking at a m2 pricing here is a list of questions to ask your builder to ensure you have an accurate picture of the cost break down.

Is the rate for design-and-build or concept plans?

You can save money by choosing an existing design, but if you expect a bespoke, architecturally designed home, make sure that’s what you get quoted for.

The shape of the house will also have an impact on cost.  For example, one of the key things that determines how much a home costs to build is the length of its external walls.  An H-shaped design with the same square meterage as a rectangular design will cost more because it requires more lineal metres of framing, external corners, wall junctions, flashings, cladding, paint etc.

Internally, small, complex spaces or features such as cathedral ceilings, don’t change the size of the house but they do affect the cost and they therefore cost more to build than large open plan areas.

Does the m2 rate differ depending on the size of the house?

Yet another factor to consider is economy of scale, a small house still has a lot of fixed costs that make the m2 rate higher when divided by the floor area.  As the floor area increases the square metre rate tends to decrease, as the fixed costs (consent fees, site costs, delivery costs, etc.) are spread over a larger area. Garages don’t cost much to build, but kitchens and bathrooms do, so an attached garage brings down square meter rate while adding a bathroom will increase it.

Does the rate include Building and/or Resource Consent?

The first consent is compulsory so needs to be factored into the final cost.  Resource Consents apply to work you may be required  to do on the land. It is also worth noting that sometimes the costs outlined on building consent forms by applicants are artificially low because they are linked to the cost of the consent application.

What level and quality materials?

The type of materials used for features like cladding, window joinery, flooring, tiling will affect the cost.  Features like stone bench tops and triple-glazed windows cost more, but often greater value to the finished home. 

It’s often just as important to ask what is excluded in the costing - appliances, floor coverings, cabinetry, painting?

Is site preparation or earthworks included in the rate?

Does the m2 cost include earthworks, drainage, foundations or safety equipment such as scaffolding etc?  Excavation costs are often excluded from advertised square metre rates because of factors such as ground condition, site gradient and complexity of earthworks. Depending on your building site, location or zoning, you may also need to obtain a geotechnical report to address issues such as rocky or soft ground which may be encountered once work starts. 

Is landscaping, driveways, decking or patios, included?

Even though these features may appear in the floor plan and are considered an important part of making the home more comfortable, they are usually not included in the quoted m2 rate, which means they need to be factored in additionally.

What type of electrical and plumbing plan is included?

How many electrical fittings are assumed? It’s important to look at plans with a critical eye and see how many sockets and fittings are allowed for, will you have enough for hobbies or special appliances, or do you want outdoor power or landscape lighting, will the lighting plan suit you’re use of the space?

Is there provision for waste water treatment (septic tank etc) or rainwater collection or any gas fitting costs?

If the site is in a rural location plumbing costs can increase significantly. 

Ultimately, the size and complexity of both plumbing and electrical services are a major cost.

Does the rate include the Goods & Services Tax (GST)?

Fifteen percent may not sound like much, but GST on design services, materials and sub contractors can quickly add up.

Another important but less tangible consideration is the ongoing costs of maintaining the home over the coming years. Very few people factor this into their calculations, we all tend to go for the cheapest up-front price. It is hard to assess the impact on health or well-being when spending on design. It is slightly easier to calculate savings from an energy efficient and low-maintenance house. Also important is how the style and design of the building impact future resale?

Ultimately, the old saying - “you will get what you pay for” is very true, but the misleading price per m2 model, leaves clients not really knowing what they are getting for their money. Working with a transparent and client focused builder such as the team at Kit Markin, gives clients the reassurance of up front costings right from the start and excellent on going communication.