How Much Does It Cost to Renovate in Melbourne? Why Per-Square-Metre Figures Mislead

It's the first question almost everyone asks me, usually in the first five minutes of the first call: roughly what will this cost?

It's a fair question. You can't decide whether to renovate, extend or move without some sense of the number. So I'll give you the published ranges for 2026 below. But I'll also explain why I stopped relying on them, and what I look at instead when I'm helping someone set a real budget.

The numbers people search for

Here is what current guides are quoting for metropolitan Australia in 2026, GST inclusive:

• Ground-floor extension: about $3,500–5,500 per m²
• Second-storey addition: about $4,500–7,000 per m²
• Kitchen renovation (mid-range): about $25,000–45,000. Archicentre's 2026 range for a standard fit-out is $23,000–49,000.
• Bathroom renovation: about $15,000–22,000 for a standard bathroom and $25,000–40,000+ for premium. Archicentre's 2026 range is $17,500–35,000.

Construction costs have also settled after a few wild years. The Cordell Construction Cost Index rose 2.5% nationally in the year to December 2025, its smallest annual increase since 2002. Builders aren't getting cheaper, but they have mostly stopped getting more expensive every quarter.

These are useful for one thing: telling you which order of magnitude you're in. A 30 m² rear extension isn't a $100,000 project, and it probably isn't a $400,000 one either.

Why I don't price your house per square metre

On a recent regional new-build, the builders kept coming back to us with prices "per square". At some point I had to say it plainly: I can't keep going on per-square figures. They're too blunt, and they make it impossible for me to advise the client properly.

The problem is that a square metre of hallway and a square metre of ensuite are completely different things. Two houses with the same floor area can differ by hundreds of thousands of dollars, and the reasons are almost never the size. A per-m² rate is an average of things that might not be in your project at all.

What I ask builders for instead is a detailed, itemised price against the drawings, with their exclusions and assumptions listed. It takes longer, but it's a number you can actually make decisions with.

The five things that actually set your number

1. How many wet rooms, and whether the plumbing moves

Kitchens, bathrooms and laundries are where the money goes. My working rule of thumb is to allow $30,000–50,000 per wet room for a like-for-like update, if the services stay roughly where they are. I count the kitchen as one, a bathroom as one, and a laundry plus powder room together as one. I wouldn't suggest allowing much less than that.

The quickest way to blow that number is to move the plumbing, especially on a concrete slab. In an ensuite, the distance to the sewer stack drives the cost harder than anything else in the room. Keep the wet areas stacked and close to existing services and you'll save more than you would by choosing cheaper tiles.

2. The age and condition of the house

An older house hides things: tired stumps, original wiring, asbestos, a bit of termite history. On any older house I treat a 10% contingency as non-negotiable. For a 1920s–30s house where nobody genuinely knows what's behind the walls, 15–20% is more honest. Contingency isn't pessimism. It's what stops one surprise from becoming a crisis.

3. Access

Can a small excavator get down the side of the house? If it can't, everything gets carried in by hand or lifted over. On one recent project a builder pointed out that lifting a machine in costs around $10,000 a day plus traffic control. Tight inner-west blocks and terraces with no side access cost more to build on, and that has nothing to do with floor area.

4. Finishes and labour, not just materials

People budget for the price of a tile. Builders price the laying of it. Subway tiles are beautiful, but they're expensive to buy and expensive to lay. Shadow-line plaster, custom joinery and complex window junctions all add hours on site. When I'm value-engineering a design, I'm usually looking at labour as much as materials.

5. Everything outside the building contract

The builder's price is not your project cost. You'll also need:

• design and consultant fees (architect, engineer, land surveyor, building surveyor, energy rater, soil test)
• permit and lodgement fees, and the building levy, which is calculated on the final contract figure
• landscaping, window furnishings and anything "supplied by owner"
• somewhere to live, if you move out during the works
• contingency

So the number you give a builder isn't the total you have. It's what's left of that total once fees, permits, the extras above and contingency come out, and it's often a fifth to a quarter less. I'm always open with builders about that construction budget. It gets you better advice than keeping it secret.

Watch for prices that look too low

When builders' prices come back far apart, the gap is rarely profit margin. It's usually scope: something one builder included and another left out, or a low "allowance" (a provisional sum or prime cost item) that will reappear later as a variation. I'm always very dubious of prices that just seem too low. The cheapest number on tender day is often not the cheapest number at handover.

So how do you set a realistic budget?

1. Work out what you're actually solving. Sometimes the answer is a better layout, not more floor area. (I've written about whether you need an extension or just a better layout.)
2. Count your wet rooms and decide early whether any plumbing has to move.
3. Be honest about the house. Get the stumps, roof and wiring looked at before the design goes too far.
4. Hold a contingency that matches the age of the house.
5. Get builders involved early so you're testing the design against real prices while it can still change, not after the drawings are finished.

If you'd like a realistic range for your house, that's exactly what a Clarity Consultation is for. In about 90 minutes we work out the scope, the likely budget and the next steps you can take to a builder.

Frequently asked questions

What does a renovation cost per square metre in Melbourne in 2026? Published guides put a ground-floor extension at about $3,500–5,500/m² and a second storey at about $4,500–7,000/m² (GST inclusive). Use these as a sense of scale only. Wet rooms, access, the condition of the house and finishes move the real number far more than floor area does.

How much should I allow for a kitchen or bathroom renovation? As a rule of thumb, allow $30,000–50,000 per wet room for a like-for-like update with the plumbing left in place. Moving services, especially on a slab, costs significantly more.

How much contingency should I keep for a renovation? At least 10% on an older house, and 15–20% where the services and structure are unknown, such as a 1920s–30s house that hasn't been touched in decades.

Why do builders' quotes for the same project vary so much? Usually because they're pricing different things: different exclusions, different allowances, or different assumptions about access and what's hidden in the walls. Ask every builder for an itemised price against the same documents so you can compare them like for like.

Figures are indicative ranges from published 2026 guides (YourPropertyGuide, Archicentre via the same guide, and Cotality's Cordell CCCI) and my own project experience. They're general information, not a quote for your project.