How Much Does a Home Renovation Cost in Melbourne? A Realistic Budget Guide
In Melbourne, a mid-range renovation or extension typically costs $3,500–$5,500 per square metre once design, permits, and construction are included — higher for double storey work, heritage sites, or high-end finishes. The build itself is usually only 75–85% of the total; the rest gets absorbed by fees, permits, and the costs people forget to budget for.
Cost is usually the first question in an initial conversation, and understandably so — it shapes everything from the size of the project to the materials on the table. A realistic figure early on saves months of designing something that later needs to be scaled back.
Where the money actually goes
Construction (labour and materials): the largest share, typically 75–85% of total project cost
Design and documentation fees: architect, engineer, and any specialist consultants
Permits and statutory fees: planning permit, building permit, council contributions
Fit-out and selections: kitchens, bathrooms, joinery, and finishes — often underestimated
Renovation cost by project type
Cost per square metre varies significantly depending on what you're building. A bathroom renovation, with its concentration of plumbing, waterproofing, and tiling, typically costs more per square metre than an open-plan living extension. A kitchen sits somewhere in between, driven largely by joinery and appliance selections. Whole-home renovations tend to land closer to the middle of the range, since they blend high-cost wet areas with lower-cost living and bedroom space.
Costs people most commonly forget to budget for
Site costs — soil testing, demolition, and services relocation, which vary hugely by site
Temporary accommodation if the home isn't liveable during construction
Furniture, window furnishings, and landscaping once the build is finished
A contingency for the unexpected — most experienced builders recommend at least 10–15% of the construction budget
These are rarely dishonest omissions — they're simply easy to overlook when a budget conversation is focused on the build itself. Asking your architect to walk through the full project cost, not just the construction quote, is the easiest way to avoid a mid-project shortfall.
Why cost per square metre varies so much
Two renovations of the same size can land at very different price points depending on site access, existing structure, and how much of the original building is being retained versus rebuilt. A renovation on a tight inner-Melbourne block with limited access will almost always cost more per square metre than the same brief on an open suburban block, simply because of the added cost of getting materials and machinery onto site.
How renovation finance affects your total budget
The construction and design figures homeowners focus on are rarely the whole financial picture. How a renovation is financed can add its own costs, and understanding this early avoids a budget that looks accurate on paper but doesn't hold up once finance is arranged.
Construction loans are typically drawn down in stages as building milestones are reached, rather than as a single lump sum, which affects cash flow through the project
Lenders often require a fixed-price building contract before approving a construction loan, which is one reason a detailed, fully specified quote matters beyond just budget accuracy
Loan establishment fees, valuation costs, and any bridging finance if you're not selling another property all sit outside the construction budget itself
Interest costs during the build, particularly on larger or longer projects, are worth factoring into a realistic total cost picture rather than assuming the quoted construction figure is the final number
Talking to a lender or mortgage broker early — ideally around the same time as your first architect consultation — means your design brief and your finance are developed in parallel, rather than discovering a mismatch between the two partway through documentation
How to get an accurate quote
Get a cost plan at concept stage, based on early drawings, not a verbal estimate
Ask for quotes to be broken down by trade, not just a single lump sum
Make sure selections (tiles, fixtures, joinery) are specified before pricing, not left as allowances
Allowances — placeholder budget figures for items not yet chosen — are one of the most common sources of a final bill that doesn't match the original quote. The tighter the specification before pricing, the more reliable the number.
How to keep a renovation budget on track
Lock in your design brief before documentation begins — late changes are the most common cause of cost blowouts
Get a cost plan at concept stage, not after documentation is finished
Build in contingency from the start rather than treating it as optional
Frequently asked questions
Is it cheaper to renovate or knock down and rebuild?
It depends on the condition of the existing structure — renovating is often cheaper for smaller-scope projects, but a full rebuild can be more cost-effective than a deep renovation of a poor-conditioned home.
How much contingency should I set aside?
At least 10–15% of the construction budget, more for older homes or heritage sites where unforeseen conditions are more likely.
What's the biggest hidden cost in a Melbourne renovation?
Site costs — demolition, soil conditions, and services relocation — since they're highly site-specific and hard to estimate before investigation.
Why do renovation quotes vary so much between builders?
Differences usually come down to how much is specified versus left as an allowance — a detailed, fully specified quote is more reliable than a lump-sum estimate.
Do lenders need a fixed-price contract before approving a renovation loan?
Most do, since it gives them a defined cost to lend against. This is one of the practical reasons a detailed, fully specified quote — rather than a rough estimate — matters early in the process.
Should I get multiple quotes before committing to a builder?
It's generally worth it, provided each builder is quoting against the same fully specified drawings and selections — comparing quotes based on different levels of detail tends to create a false sense of which one is actually cheaper.
If you're putting together a renovation budget and want a realistic cost picture for your project, book a consultation with our team.
Formery Architecture + Interior Design is a Melbourne Architecture studio working across residential renovation, new builds, subdivision and dual occupancy projects. Our director Emma works with homeowners across Melbourne's inner north, inner south-east and bayside suburbs.
Book a free discovery call —formery.com.au