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Saturday, 21 June 2008

The Money Pit

I took the family for an outing to look at display homes by Kauley Homes (the builder whose plan I mentioned in my last post). It turned out that there was only house currently open for inspection, and it didn't have the floor-plan I'm most interested in (that display house had been sold several months ago and was no longer open for inspection). The quality of the finish was good (you'd hope so on a display home), but many of the features shown in the display home are "extras", so the quoted base price is really just for a house built to "lock-up" stage, plus kitchen and bathroom fittings. Completing the house with floor coverings, air conditioning etc adds around 50% to the final cost. For example, the house I'm interested in has a base price of $315,000 but completed with the "options" it would cost around $400,000-$450,000. To have a flat patio roof on the house would require it be constructed using double brick rather than brick veneer (so it can support a flat concrete patio roof), which would increase the cost to around $600,000. Added to that will be extra site costs due to the split level block, the cost of adding in a cellar/basement level, and the cost of demolishing the existing house and clearing the site. Even if I liquidated all my non-retirement investments we'd have to take out a bridging loan to complete the house construction, and then pay it off when we move in and can sell our current house. This would leave us with a small mortgage on the new house and no savings other than our retirement fund. Overall, I'm amazed at how much it would cost to build such a relatively modest house, considering it doesn't include land purchase or any luxury fittings. It's not a mansion by any stretch of the imagination. Goes to show that a million dollars isn't what it used to be.

One bright spot, financially speaking, is that obtaining a topographic site survey, having a 'concept' plan drawn up with my requested modifications, and getting an approximate quote will "only" cost $3,000. Although that's a lot of money to throw away if we decide not to proceed with getting complete plans drawn up and submitted to council for approval, it will provide the information required to decide if we really want to (and can afford to) build such a house, or should just stay put in our current home.

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Anonymous said...

Did you work out the cost per square meter? Also, there are risks of company liquidity until completion - a real concern in this times.

Anonymous said...

I agree with what anonymous posited. Have you? said...

I've haven't worked out cost per sqm yet -- we'll be looking at other house plans over the next few months, and start making comparisons when we've narrowed it down to a select handful. Aside from telling us if a particular builder is outrageously overpriced, the cost per sqm won't tell us all that much, since I want to get the design customised. I'll have to pay for a topographic survey of our land and a 'concept plan' before we'll have an approximate cost for the final design to work from.

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