Rising Building Costs in Victoria 2025: What Homeowners Need to Know

If you’ve been thinking about building your dream home in Victoria, you’ve probably noticed one thing: everything feels more expensive than it used to.

Construction costs have surged in recent years, while headlines about major builders collapsing, like Porter Davis in 2023, have left many homeowners questioning whether now is the right time to build.

The good news? With the right knowledge and the right team, you can still move forward confidently. In this blog, we’ll explain why costs have risen, what risks to watch out for, and most importantly, how working with an architect can help you stay in control.

Why Are Home Building Costs Rising in Victoria?

Building a home has always been a big investment, but the past few years have pushed costs up faster than anyone expected.

Here’s what’s driving it:

  • Material price spikes - Timber, steel, and concrete have risen around 20–30% due to global demand, inflation, and ongoing supply pressures.
“It’s not just homeowners feeling the squeeze - even Victoria’s biggest projects are struggling. The state saw over $11.7 billion in cost overruns across major projects in a single year, according to the Auditor-General (Herald Sun). This shows just how widespread and challenging cost escalation has become.” 

To put it in perspective: the average cost to build a new house in Australia jumped 29% in just five years, from around $345,000 in 2019–20 to $444,000 in 2023–24. And Victoria has been hit harder than most. 

Builder Collapses in Victoria: Lessons from Porter Davis

The collapse of Porter Davis Homes in 2023 was a wake-up call for thousands of families. Overnight, 1,500 homes across Victoria were left in limbo, with many clients unsure how to move forward.

Why did it happen?

  • Fixed-price contracts that couldn’t keep up with soaring costs.
  • Thin margins across the building industry.
  • Rising interest rates reducing new demand.

The risk for homeowners is clear: projects left unfinished, deposits at risk, and long delays finding a new builder.

The safety net is Domestic Building Insurance (DBI), which covers incomplete works if your builder dies, disappears, or becomes insolvent. But even then, the process can be stressful and costly to resolve.

This is why careful planning and independent advice upfront is more important than ever.

How to Choose the Right Builder and Avoid Budget Blowouts

If you’re planning a new home, here are some practical steps to reduce your risk:

  • Get multiple detailed quotes - Not just a headline figure. Check inclusions, exclusions, and provisional sums carefully.
  • Don’t be fooled by the cheapest price - Low quotes often hide missing items or unrealistic allowances that lead to costly variations later.
  • Check builder credentials - Review their financial health, licenses, and track record of completed projects.
  • Engage independent experts - A building inspector or consultant can review your contract and inspect works at each stage.

Remember: once you’ve signed a contract, changes are expensive. The best protection is to go in with eyes wide open, and a clear, complete design package.

How BQ Architects Helps Keep Your Project on Budget

This is where having an architect on your side makes all the difference. At BQ Architects, our role goes far beyond drawing plans, we act as your advocate throughout the building journey.

Here’s how we help:

  • Thorough documentation - We prepare detailed drawings and specifications so builders can quote accurately.
  • Competitive tendering - We source quotes from trusted, proven builders to make sure you’re comparing apples with apples.
  • Contract administration - We manage the building contract, monitor progress, and keep payments and variations under control.
  • Value-engineering design - We balance your vision with smart, cost-effective design choices that don’t sacrifice quality.
  • Independent advocacy - Unlike a builder, we work solely for you. Our job is to protect your budget, your vision, and your peace of mind.

Final Tips for Building a Home in Victoria in 2025

Yes, building costs have risen, but you can still build your dream home if you plan carefully.

  • Do your homework - Don’t sign a contract without understanding the details.
  • Engage professionals early - Architects, surveyors, and inspectors are there to protect you.
  • Work with the right team - An experienced architect can save you money, time, and stress.

Ready to Build Your Dream Home in Victoria Without the Stress?

Building costs may be rising, but with the right strategy you can still get the home you want,  without the blowouts.

At BQ Architects, we specialise in designing homes that are not only beautiful and functional, but also practical, compliant, and cost-smart.

Contact us today to discuss your project. Or explore our past projects to see how we’ve helped other Victorians bring their dream homes to life, on budget and with confidence.