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.

Now, 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.

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?

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.

Fast forward to 2024, and the landscape has changed significantly. As you may be aware, the build cost has surged dramatically over the past two 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. These data are sourced from the 2023 Rawlinsons Construction Cost Guide and pertain to home construction in Melbourne (mid-2023).

• A project home by a volume builder, featuring basic finishes, might have fallen within the range of $1470 to $1580 per square metre. Opting for medium-grade finishes could elevate the cost to approximately $1800 per square metre.
• For an individual home, the price range varies widely, and were spanning from $2650 to $4000 per square metre based on the price guide.

However, my observation suggests that it’s uncommon to find builders willing to construct a house for less than $3000 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, 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.

Affordability is a central concern for me. I take pride in the ability to design and build passive houses well below comparable construction rates throughout the years. While I cannot guarantee a specific square metre rate for our designs, I am confident that by following our guidance, we can deliver passive houses at a cost lower than industry expectations.

However, I recognise that a build cost ranging between $4000 and $5000 per square metre is beyond the reach of many. Unfortunately, this means that passive houses are currently unaffordable for a significant portion of our population.

Nevertheless, with a thoughtful approach to design and construction, affordability can be improved, making the concept more accessible. Even if a passive house is financially out of reach, simplifying construction and design wherever possible allows you to allocate the maximum budget to critical elements such as excellent insulation, high-performance windows, and ideally, a mechanical heat recovery ventilation system.

Here’s a concise overview of the key factors influencing your build cost per square metre. More specific details will be discussed later:

• 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. Some builders may have a minimum rate, e.g., not building below $5000 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.

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.