The hidden costs of building a home in Dunedin and how to prepare
If you want to get a new home, chances are you've likely considered building. With a few new developments opening up in and around Dunedin city, building a home is an exciting opportunity to create a custom space that perfectly suits you and your family. From choosing your layout to picking finishes, there’s a lot to love about building from scratch.
While most people focus on the obvious costs like the section, build contract and deposit, there are often a number of hidden costs that can catch buyers off guard if they aren’t prepared.
Here are some of the most common hidden costs in a new build, and how you can plan ahead for them.
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Site preparation costs
Not all sections are created equal. Depending on the land you purchase, there may be additional costs involved before building can even begin.
This can include:
- Earthworks and excavation
- Retaining walls
- Drainage
- Soil testing
- Driveway access
- Bringing services (water, power, internet) onto the site
Sloping sections, which are common around Dunedin, can often come with significantly higher preparation costs than flat land. Reclaimed land can also cost more, as the earthworks and piles need to be stronger and deeper.
👉 Tip: Before purchasing land, get advice from your builder (and depending on the site, potentially an engineer) and consider obtaining reports on the site so you understand exactly what may be required.
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Landscaping and outdoor areas
One thing many buyers forget is that a new build often comes with dirt… and lots of it. This dirt needs to go somewhere, so be sure to factor in dirt removal or check if it’s part of your earthworks service.
Landscaping, fencing, decks, patios and driveways are also often excluded from build contracts and can add up quickly once the home is complete.
👉 Tip: Ask your builder exactly what is included in the contract and what isn’t. Budget separately for outdoor finishing costs so they don’t become an unpleasant surprise later.
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Upgrades and variations
Display homes and brochures can be slightly misleading because they often include upgraded finishes and premium extras. These can all increase costs throughout the build process.
Things like:
- Higher-end appliances
- Tiled showers
- Stone benchtops
- Extra heating or air conditioning
- Feature lighting
- Flooring upgrades
👉 Tip: Have a clear understanding of what comes as standard and allow a budget for the upgrades you may decide you want later.
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Construction delays
Unfortunately, build timelines don’t always go to plan. Weather delays, supply shortages, and contractor availability can all impact your scheduled completion dates.
This can create extra financial pressure if you are:
- Paying rent while building
- Covering interest costs during construction
- Managing multiple living expenses at once
👉 Tip: Build some buffer room into your finances and avoid stretching yourself too thin from the beginning.
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Interest and lending costs during the build
Construction lending works differently from a standard home loan. Funds are generally released in stages as the build progresses, and interest is charged as money is drawn down.
Depending on the project, there may also be:
- Valuation costs
- Progress inspection fees
- Legal fees
- Council consent costs
👉 Tip: Speak with a mortgage adviser early so you understand how construction lending works and what costs to expect throughout the process.
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Budget blowouts
Even the most well-planned builds can experience unexpected expenses along the way. Material price increases, changes to plans, or unexpected site issues can all push costs higher.
👉 Tip: A contingency fund is essential. Many experts recommend allowing an extra 10–15% buffer in your budget for unexpected costs.Talk to your mortgage adviser about how this works with your lending.
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Should you build?
Building a home can absolutely be worth it, but it’s important to go in with realistic expectations and a solid financial plan. Understanding the hidden costs upfront can help you avoid unnecessary stress and make the process far more enjoyable.
At Loan Market Dunedin, we help clients navigate the lending side of new builds every day, from turnkey properties through to full land-and-build projects. We can help you understand your borrowing power, structure your lending correctly, and prepare for the costs that you might forget about.
Thinking about building in Dunedin? Get in touch with the team and let’s chat about how to set your project up for success.
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