Building a New Home in Australia: The Complete Guide (2026)

Building a new home gives you the opportunity to design a property that perfectly suits your lifestyle, rather than compromising with an existing home. However, the process is more complex than buying an established property — it requires understanding building contracts, navigating council approvals, managing progress payments, and knowing your rights if things go wrong.

This guide covers the entire building process from choosing a builder through to handover and beyond, with specific information for each Australian state and territory. Whether you are building on a house-and-land package, a knockdown-rebuild, or a custom design on your own block, the principles and protections are broadly the same. If you are considering adding a secondary dwelling, review the granny flat rules in Australia before you start planning.

Step 1: Choosing the Right Builder

Your choice of builder is the single most important decision in the building process. A reliable, experienced builder will save you stress, money, and time. A poor choice can lead to delays, defective work, and costly disputes.

What to look for in a builder

• Licensing and registration: Every state and territory requires builders to hold a licence. Verify the builder's licence number through your state's consumer affairs or building authority (e.g., NSW Fair Trading, VBA in Victoria, QBCC in Queensland). Check that the licence covers the type of work and the contract value of your build.
• Insurance coverage: Confirm the builder holds current public liability insurance and that they will provide the required home warranty insurance (also called builder's indemnity or domestic building insurance) before construction starts.
• Track record and references: Ask for references from recent clients and inspect completed homes if possible. Search for reviews online and check the builder's complaint history with your state's building regulator.
• Financial stability: Builder insolvencies have increased in recent years. Ask how long the company has been operating, check their ASIC company extract for any red flags, and be cautious of builders offering prices significantly below competitors.
• Communication style: Building a home is a long process with many decisions. Choose a builder who communicates clearly, responds to questions promptly, and assigns you a dedicated project manager or site supervisor.

Step 2: Understanding Building Contracts

A building contract is a legally binding agreement between you (the owner) and the builder. It sets out the scope of work, the price, the timeline, and both parties' rights and obligations. Understanding your building contract is essential — it is your primary protection if something goes wrong during construction.

For guidance on how to approach reviewing contracts in general, see our guide to reading property contracts.

Fixed-price contracts vs cost-plus contracts

There are two main types of building contracts in Australia, and the difference between them significantly affects your financial risk.

For most residential builds, a fixed-price contract is strongly recommended. It provides cost certainty and puts the risk of price increases on the builder. If you do enter a cost-plus contract, ensure it includes a cost estimate with a cap or upset limit, and that the builder must obtain your written approval before incurring any cost above a specified threshold.

Key clauses to understand in your building contract

• Contract price and what it includes: The total price should clearly state what is included (site preparation, fixtures, finishes, landscaping) and what is excluded (council fees, utility connections, driveways). Watch for provisional sums and prime cost items — these are estimates that can change.
• Provisional sums and prime cost items: Provisional sums cover work where the cost is not yet certain (e.g., excavation, rock removal). Prime cost items are allowances for items you will select later (e.g., kitchen appliances, tapware). If actual costs exceed the allowances, you pay the difference.
• Variations: Any change to the original plans or specifications during construction is a variation. The contract should require that all variations are agreed in writing before work proceeds, with a clear cost and timeline impact stated. Never agree to verbal variations.
• Construction timeline: The contract should specify the number of working days to complete construction and define what counts as a delay (weather, material shortages, variations). Ensure there is a practical completion date and understand the consequences of delays.
• Dispute resolution: Check how disputes are handled — most standard building contracts include a dispute resolution process starting with negotiation, then mediation or adjudication, before escalating to a tribunal or court.
• Termination rights: Understand the circumstances under which either party can terminate the contract and the financial consequences. Some contracts allow the builder to terminate if progress payments are not made within a specified period.

Step 3: Council Approvals and Planning Permits

Before construction can begin, you need approval from your local council (and sometimes a private certifier). The approval process involves two stages: planning approval and building approval.

Step 4: Progress Payments

Unlike buying an existing home where you pay the full amount at settlement, building contracts require you to make progress payments at defined stages of construction. Each state regulates the maximum percentage that can be claimed at each stage.

Typical progress payment schedule

While the exact percentages vary by state and contract, a standard progress payment schedule for a residential building contract generally follows this structure:

• Deposit: 5% of the contract price (some states cap the deposit at 5% or 10%). Paid upon signing the contract.
• Base stage (slab or footings): 10-15% of the contract price. Payable when the concrete slab is poured or the footings and subfloor framing are complete.
• Frame stage: 15-20%. Payable when the structural frame (walls, roof trusses) is erected and the roof is on.
• Lock-up stage: 20-35%. Payable when the building is enclosed — external walls are complete, windows and doors are fitted, and the roof is covered.
• Fixing stage: 15-25%. Payable when internal fittings are installed — plasterboard, kitchen and bathroom cabinetry, internal doors, and built-in shelving.
• Completion (practical completion): Remaining balance (typically 5-10%). Payable when the build is practically complete and the building certifier has issued the occupation certificate.

Step 5: Building Inspections at Each Stage

Mandatory inspections are conducted at critical stages of construction by your building certifier or private building surveyor. However, you should also consider engaging an independent building inspector to conduct separate inspections on your behalf — the certifier works for compliance with the building code, while an independent inspector works for quality assurance.

An independent building inspector typically charges $300 to $600 per inspection. Engaging them for the pre-slab, frame, pre-lining, and pre-handover stages is strongly recommended. The total cost of $1,200 to $2,400 is a small investment to protect a build worth hundreds of thousands of dollars.

Step 6: Handover and Defect Lists

Practical completion is the point at which the building work is complete except for minor omissions and defects that do not prevent you from occupying the home. At practical completion, your building certifier issues an occupation certificate (or certificate of final inspection), allowing you to move in.

Your handover checklist

• Conduct a thorough pre-handover inspection. Walk through every room with your contract plans and specifications. Check walls and ceilings for cracks, paint defects, and uneven surfaces. Test every tap, power point, light switch, and appliance.
• Prepare a defect list. Document every defect with photos, descriptions, and the specific location. Provide this list to the builder in writing. The builder is obligated to rectify defects at their cost within a reasonable timeframe.
• Check all documentation. Ensure you receive copies of the occupation certificate, compliance certificates for plumbing and electrical work, waterproofing certificates, termite treatment certificates, appliance warranties, and maintenance manuals.
• Test all systems. Run every air conditioning unit, exhaust fan, range hood, and hot water system. Flush every toilet, run every tap (hot and cold), and test every window lock and door latch. Check garage door operation and any automated gates.
• Inspect external areas. Check driveways, paths, fencing, retaining walls, landscaping, letterbox, and drainage. Ensure the site has been cleaned and all construction debris has been removed.
• Collect keys and codes. Obtain all keys (house, shed, meter box, windows), security codes, remote controls, and smart home access credentials.

Defects Liability Period

After handover, you enter the defects liability period (also called the maintenance period or warranty period). During this time, the builder is obligated to return and fix any defects that emerge in their work. The length of this period varies by state but is typically 6 to 13 weeks for minor defects and 6 to 7 years for major (structural) defects.

• Minor defects: Cosmetic issues like paint cracking, minor settlement cracks, tiling chips, and sticking doors. Typically covered for 6 to 13 weeks after practical completion (varies by state).
• Structural defects: Issues affecting the structural integrity of the building, such as foundation movement, major cracking in load-bearing walls, or roof structural failure. Covered for 6 years (some states 6.5 or 7 years) from practical completion.

Document any defects that appear during the defects liability period and notify your builder in writing as soon as possible. Do not wait until the period is about to expire — some defects worsen over time and early notification gives the builder the best chance of an effective repair.

Home Warranty Insurance by State

Home warranty insurance (also called domestic building insurance or builder's indemnity insurance) protects you if your builder dies, disappears, or becomes insolvent and cannot complete the work or fix defects. In most states, the builder must take out this insurance before construction begins. It does not cover disputes about quality where the builder is still trading — it only covers situations where the builder cannot fulfil their obligations.

• NSW: Home Building Compensation Fund (icare) — required for residential work over $20,000. Covers up to $340,000. The builder must provide the certificate before taking any payment.
• Victoria: Domestic Building Insurance — required for work over $16,000. Covers structural defects for 6 years and non-structural for 2 years after completion. The builder arranges the policy and provides a certificate.
• Queensland: Home warranty insurance is provided through the QBCC scheme. All licensed builders are covered. Homeowners can make a claim to QBCC if the builder cannot rectify defects. The scheme covers up to $200,000.
• South Australia: Building Indemnity Insurance — required for work over $12,000. The builder must provide a certificate before commencing work.
• Western Australia: Home Indemnity Insurance — required for work over $20,000. The builder must provide a certificate before requesting the first progress payment after the deposit.
• Tasmania: Home Warranty Insurance — required for residential work over $20,000. Coverage includes structural defects for 6 years and non-structural for 2 years.
• ACT: Home Warranty Insurance — required for residential work over $12,000. Covers up to $85,000 per dwelling for structural defects for 6 years.
• NT: Home Warranty Insurance is required for residential work over $12,000 through approved insurers.

Common Pitfalls When Building a New Home

• Not reading the contract thoroughly. Many owners sign building contracts without reading or understanding the full document. As with any property contract, take the time to review every clause. Read our guide to reading property contracts for general principles that also apply to building contracts.
• Underestimating site costs. If you are building on a sloping block, rock, or reactive soil, site preparation costs can add $20,000 to $100,000+ to your build. Ensure your builder has conducted a soil test and includes realistic site cost allowances in the contract.
• Choosing the cheapest builder. An unusually low quote may mean the builder is cutting corners on materials, using substandard subcontractors, or underbidding to win the job with the intention of recovering costs through variations.
• Ignoring provisional sums. Provisional sums are estimates, not caps. If the actual cost of excavation, rock removal, or utility connections exceeds the provisional sum, you pay the difference. Ask the builder to justify every provisional sum and get independent quotes where possible.
• Making too many variations during construction. Each variation adds cost and delays. Finalise your design, selections, and specifications before construction begins. If you do need a variation, get the cost and timeline impact in writing before authorising the change.
• Not engaging an independent inspector. Relying solely on the building certifier for quality assurance is insufficient. The certifier checks code compliance, not workmanship quality. An independent inspector advocates specifically for your interests.

Due Diligence Before Signing a Building Contract

Before committing to a building contract, apply the same rigorous due diligence approach you would use for any major property transaction. Our property due diligence checklist covers the general framework, and first home buyers should also review the first home buyer guide for information on grants and government incentives that may apply to new builds.

• Have the building contract reviewed by an independent building solicitor or conveyancer.
• Verify the builder's licence, insurance, and financial standing.
• Obtain a soil test report for the site.
• Confirm all council approvals are in place or included in the timeline.
• Understand every provisional sum, prime cost item, and allowance.
• Check the builder's complaint history with your state building authority.
• Speak to at least two recent clients of the builder.

Related Guides

• Property Due Diligence Checklist — The complete checklist for investigating a property or building site before committing.
• How to Read a Property Contract — Step-by-step guide to understanding the key sections of any Australian property contract.
• First Home Buyer Guide — Complete guide to buying your first home, including grants and government incentives for new builds.
• Property Contract Red Flags — Warning signs to watch for in any building or property contract.
• How to Buy Off the Plan — Risks, benefits, and what to check before committing to an off-the-plan purchase.