The Big Question

The burning question: How much does it presently cost to construct a PassivHaus or a high-performing home? This question frequently pops up, and understandably so.

Regrettably, there’s no simple or definitive answer. Ask different people in the industry, and you’ll receive varying responses. It’s a somewhat taboo topic; discussing budgets can be delicate. Nobody wants to inadvertently tread on someone’s toes, and there’s a reluctance to foster false hopes regarding potentially unrealistic budgets.

Before delving into the subject, let’s take a moment to observe the changes that have unfolded in the construction industry in recent years and explore the current trajectory of build costs.

General Comparisons

There are some more general questions like:

• Does a passive house cost more than building a normal home? Yes and no. It depends on what you compare it to.
• Does it cost more than a home from a volume builder? Yes. But any custom designed home will cost more than a volume builder home.
• Does it cost more than a highly energy efficient home following passive solar design principles? Yes and no. Will elaborate shortly.
• Does it cost more than a custom designed home with a high-end builder? Not necessarily.

I understand that my statement might seem a bit puzzling at the moment, but please bear with me. Even within the industry, many are engaged in the same debate. The central question and challenge for me and our team revolve around one key issue: How can we render passive houses more affordable?

Looking Back: 2018–2021

In 2018 and 2019, the prevailing belief in the industry was that building a passive house would cost no less than $3500 per square metre. Some builders wouldn’t even consider taking on a project for anything less than $5000 per square metre during that period. However, our designs managed to defy these expectations. We successfully completed several passive houses with contracts signed between 2018 and 2019, and their final build costs ranged between $2500 and $3000 per square metre. Yes, these houses have already been constructed.

Conversely, homes with contracts signed in 2020 or early 2021 were constructed at a cost ranging between $3000 and $3500 per square metre. These homes featured straightforward designs, uncomplicated roof forms, flat ceilings, and other design elements that contributed to a more economical build compared to similar passive houses. Further insights into simplifying both design and construction will be elaborated later in this blog post.

2024 - 2025 Update: The Cost Surge

Fast forward to 2025, and the landscape has changed significantly. As you may be aware, the build cost had surged dramatically over the past years. Presently, constructing a home incurs a 30–40% higher cost than it did in 2019, and, in some cases, even more than double.

I understand this might be surprising and come as a shock.

Kindly be aware that the figures provided below serve as a general estimate and are subject to significant variations. The first set of data is sourced from the 2023 Rawlinsons Construction Cost Guide and pertain to home construction in Melbourne (mid-2023).

• Project Home by a Volume Builder, Basic Finishes: $1470 to $1580 per square metre
• Project Home, Medium-Grade Finishes: Approximately $1800 per square metre
• Individual Home: $2650 to $4000 per square metre

By 2025, construction cost growth had stabilised but not stopped, with builders still facing elevated labour and material costs. Current guides suggest:

• Project Home (Volume Builder), Basic Finish: $1900–$2100 per m²
• (BMT Cost Guide, 2025 – bmtqs.com.au)
• Project Home, Mid-Range Finish: $2300–$2400 per m²
• (BMT Cost Guide, 2025 – bmtqs.com.au)
• Custom-Built Individual Home: $3000–$4300+ per m²
• (BMT Cost Guide, 2025 – bmtqs.com.au)
• This represents a few percent increase over 2024 on average, reflecting persistent labour shortages and insurance cost rises in the residential sector.

However, my observation suggests that it’s uncommon to find builders willing to construct a house for less than $3500 - $4000 per square metre, even with basic finishes and without factoring in any energy efficiency measures. Additionally, many custom design builders might decline projects for less than $4000 – $5000. If you want to pay less you most likely have to go to a volume builder.

On the other end of the spectrum, architecturally designed homes may fall in the range of $6000 – $9000 per square metre, with the potential for costs to exceed these figures.

Despite these figures, most builders I’ve consulted with assert that constructing a passive house is unlikely for less than $5000 per square metre in the current market. A high-performing home could hover around $4500 per square metre. Shockingly for many home owners, some builders suggest that constructing a new custom-designed home might not be feasible for less than a million dollars. This is a significant shift from just a few years ago when building a quality home could be achieved for $600K – $800K. The times have indeed changed.

Please be aware that the million-dollar figure and square metre rate are approximations and should be viewed as a very general guide. Each project is highly individual and necessitates accurate pricing by a builder. I acknowledge that this might not be within the means for most individuals.

Nonetheless, I am committed to challenging the existing norms. I firmly believe that with meticulous attention to detail and the creation of elegant yet straightforward designs, construction costs can be optimised. It is entirely possible to construct a passive house at a cost lower than commonly perceived.

The degree of cost reduction hinges on various factors and is influenced by the extent to which you trust and follow our advice. Implementing our suggestions on how to optimise the design and being open to compromises will also play a crucial role. In the grand scheme of a home build, elaborate architectural features and high-end finishes often add significantly more to the overall cost than upgrading to high-performance windows or improving airtightness. If the goal is to reduce build costs without sacrificing comfort or efficiency, the focus needs to shift toward performance-first priorities rather than aesthetic embellishments.

What Influences Build Costs?

Here’s a concise overview of the key factors influencing your build cost per square metre.

• Size of Home: Actual house area, size of driveway, outdoor living spaces, decking, paving, etc.
• Site Access: Whether the site is easy or difficult to access, sloped or flat, located in the inner city with tight spaces.
• Complexity of the Design: Relates to the intricacy and complexity of the design and layout, regardless of the home’s size.
• Level of Finishes and Materials: Choice between off-the-shelf products, standard colours, and materials versus custom-made options.
• Project Location: Remote locations or prestigious postcodes like Toorak or Brighton may affect build costs.
• Construction Materials: Use of off-the-shelf products rather than custom-made, and potential cost variations if builders are unfamiliar with certain materials.
• Choice of Builder: Builders’ charges can vary significantly. More experienced and established builders may have higher profit margins than newer ones. Likewise, their preferred trades might be charging on the higher end for their services. Some builders may have a minimum rate, e.g., not building below $7000 per square metre, despite efforts to simplify the project.
• Project Team/Collaboration: Collaboration is crucial, especially for high-performing homes or passive houses. A cohesive team is essential, and key stakeholders ideally should have passive house experience. Overseas studies suggest that a project team experienced in passive houses is a key factor in optimising build costs.

While some factors, like site access and slope, are beyond your control, a clever and straightforward design, coupled with an excellent project team, can help overcome certain challenges.

Passive vs Passive Solar

Interestingly, I believe that building a passive house might sometimes be more cost-effective than constructing a highly energy-efficient home following passive solar design principles. In the case of a home designed with passive solar principles, heavy reliance on thermal mass can become expensive, especially when dealing with a sloping block and the need for an elaborate concrete slab. Introducing intricate architectural features to such a home might even surpass the cost of building a passive house.

Contrastingly, adhering to passive house principles minimises the significance of thermal mass. This allows you to construct your house on a timber subfloor that follows the natural slope of the land, resulting in significant cost savings. These savings can then be allocated to invest in higher-performing windows.

In the process of designing your home, several strategies can be employed to reduce the overall build cost.

Our Net Zero Habitat Homes

To help make better-performing and healthier homes more affordable and accessible, we created our line of predesigned and prefabricated Net Zero Habitat Homes.

These homes are designed with high performance, energy efficiency, and occupant wellbeing at their core – and they follow passive house principles wherever possible. By standardising key elements and leveraging offsite prefabrication, we’ve significantly reduced complexity and build time.

The result? A collection of homes that are cost-efficient without compromising on comfort, performance, or sustainability. Our goal was simple: make great homes available to more people.

Find out more here: Net Zero Habitat Homes

I know that the build cost has gotten a bit out of control in recent years, and this has made it almost impossible for many people to still consider building a custom-designed home. And while we are not builders and cannot guarantee a fixed build cost for our designs, we are confident that we can assist you in optimising the design and keeping the cost as manageable as possible – as long as you follow our guidance and trust in our process.

This is also exactly why we created our line of Net Zero Habitat Homes – to provide a path forward. These homes are our way of helping make better-performing, healthier, and more sustainable homes more affordable and accessible for more people.

Find out more here: Net Zero Habitat Homes

𝒘𝒓𝒊𝒕𝒕𝒆𝒏 𝒃𝒚 𝑺𝒊𝒎𝒐𝒏𝒆