Is It Cost-Effective To Demolish And Rebuild Your Perth Home? 

Did you know that up to 30% of all homes built in Australia are demolish-and-build projects? This increase in demand is mainly traced to land scarcity in popular capital city suburbs, including Perth’s more densely populated areas. There are many benefits to knock down and rebuild projects, so it’s easy to see why it’s becoming more common each year.

One of the major benefits of demolishing your existing home and rebuilding it is the financial savings, both immediate and long-term. 

A knockdown and rebuild project is often more cost-effective than renovating your home, which requires a considerable amount of time and money. A knockdown and new build presents less uncertainty in terms of cost and budget. You know all the upfront costs involved from the very beginning, with no hidden fees. 

A knockdown rebuild also gives you complete design freedom. With a clean slate, you won’t have to compromise on designs, and you can opt for sustainable building materials. With many of the design elements coming directly from you, the homeowner, the budget may also become easier to manage.

However, despite how helpful it is to demolish your home and start afresh, it’s still important to look at the complete process. The first step in considering this style of build is determining whether it’s a viable option for your circumstances. This depends on your goals and the resources you have available for your project. 

From the knockdown and rebuild process to finding the right contractor and rebuilding your house, will it be cost-effective for you? Find out more on demolish and rebuild costs and what to expect below.

How Much Does It Cost To Demolish A House In Perth?

In Perth, demolition costs start at roughly $15,000-$18,000, while premium contractors charge a rough price of $25,000. A small house in an easy-to-access area and not built with hazardous materials, such as asbestos, has an estimated house demolition cost of $12,000-$20,000. 

The price depends on your demolition requirements, such as the parts you wish to salvage. With this in mind, fees can potentially reach $40,000. 

Demolishing a house isn’t just about tearing it down and destroying it. The home demolition process has several stages and there are a range of factors to consider. Before a home is demolished, it needs to be inspected, existing services need to be disconnected, and necessary permits must be obtained.

When demolishing a house, the following factors can affect the cost:

a. The accessibility of your house will, of course, impact the price you pay for demolition. Some contractors charge per square metre. If this is the case, the larger your home is, the higher your overall demolition cost.

b. The size of the house, location and access to demolition equipment can largely affect the demolition cost. If the house is in an area that is difficult to access, you could expect to pay more because of the difficulty in transporting equipment and disposable materials from the site.

c. Heavier building materials require special machinery to demolish. That’s why a brick or concrete house is more costly to demolish than a timber house. Timber can also be salvaged and recycled, which can reduce the overall demolition cost. 

d. If your house was built between 1920 and 1990, it might contain asbestos-containing materials. This will significantly increase your demolition cost because asbestos is approximately three times more expensive to remove than standard building materials. It requires specialised skills, knowledge and treatment. This goes the same if your house has mould, which also needs proper disposal from experienced removalists.

e. Each contractor charges differently. While some charge higher prices, others offer more affordable services. The differences may be because of their experience, reputation, equipment and how they price your particular job.

f. Other factors that you should consider when demolishing a house include the additional structures that need to be removed. It could be a pool, a shed, or any major structure that’s outside your house. You may also need to have trees and shrubs cleared before the new build. If the house is far from a recycling or disposal centre, this can also add to the quote in transportation costs. These factors can all impact the cost of knocking down your existing house.

What Is The Average Cost To Rebuild A House In Perth?

The cost to build a home in Perth starts at around $200,000 for a very basic single-storey project home. When building a luxury or high-quality home, you can expect costs to start around $500,000. The average building cost in Perth is roughly between $1,000-$1,250 per square metre (single-storey brick and tile project homes with medium finishes). 

In early 2020, the Australian Bureau of Statistics reported that the average cost of building in Australia is $1,393.55 per square metre. With the average house in Australia measuring two hundred and thirty square metres, the cost to rebuild is approximately $320,000. 

This figure excludes the cost of design, planning permits, site works or unique features of the block, which is why this figure is an estimated number and should only be used as a reference point rather than an expectation. 

The rebuilding cost of a house in Perth varies widely, depending on multiple factors. Examples of these considerations are:

  • The overall size of the house
  • The number of rooms you want within your home
  • Type and quality of building materials
  • Whether it’s a basic level of home finishing or you want everything completed
  • Site costs

The rebuild prices may also depend on site conditions and local council requirements. Building on a sloping block, for instance, will introduce costs not required on a level lot. Different builders will also have different prices. 

The easiest way to find out what your project might cost is to get a demolish and build quote from your local custom builder. 

Is It Cheaper To Knock Down And Rebuild Or Renovate In Perth?

It may seem like renovation is always cheaper than demolishing and rebuilding a home. However, that’s not always the case. Renovations often uncover hidden costs, especially when making structural changes to older homes. 

Renovating a home can differ in cost according to the type of work you would like to have done, just as rebuilding a house does. If your planned renovation includes a considerable amount of structural changes, starting from scratch with knockdown and rebuild might be the cheaper option. 

During a renovation, you’ll likely have to isolate rooms, shift furniture, or even move out of your home while the process is ongoing. While DIY renovations are common, it can be a considerably large task depending on your house and what work needs to be done, and the cost of professional renovations that dramatically change a home can be extensive.

A knockdown rebuild is also low-risk when compared with renovation. Although renovation could be exciting, you might end up facing significant construction challenges when you start experimenting. If the property is found not to be structurally sound, or corners were cut during the original construction, renovation costs to salvage it can spiral out of control. 

Unforeseen circumstances like this during renovation can delay the process and risk throwing out your budget, or even making the home impossible to fix while still meeting building code. With knockdown and rebuild, there are no unwanted surprises. In addition, a new construction even comes with warranties on quality, which can protect you if any issues arise. 

Additionally, a new home can be cheaper to maintain than a renovated one. It also has a lower risk of termite infestation and can be more energy-efficient. Therefore, in the long term, knockdown and rebuild may save you more money than a renovation.

Can I Organise The Demolition Contractor Myself To Save Costs?

There is nothing stopping you from organising the demolition contractor yourself, but you’ll typically get better rates through your builder. You’ll also know that the demolition contractor is reliable and can handle the specifics of the job. 

Generally, it’s financially better to have all the contractors organised through your builder. Builders have teams they consistently work with and rely on, and not only do they receive cheaper rates, but they know they can handle the scope of the job, regardless of challenges. 

How Do You Finance A Knock Down Rebuild?

You can fund your knockdown rebuild in many ways, so it’s best to talk to a financial planner or broker about your options. Financing a demolish and build project isn’t as simple as a typical home loan, as the lender is aware the existing structure will be demolished, impacting the property’s value.

This means that you’ll need to work closely with your bank or home loan provider if you have an existing mortgage, ensuring you’re able to make changes to the property itself. 

Below are some property finance options for demolish-and-build projects that may help you get started:

  • Construction loan: A construction loan differs from a standard home loan because they finance you at specific points or stages during construction. These progress payments are typically made when:

    •The contract begins
    •When the slabs are put in place
    •When the home’s frame is completed
    •When the house becomes lockable
    •When the fit-out is done
    •When the build is finished

  • Home loan redraw: if you have a home loan with redraw facility and have made extra repayments, you may be able to access these additional repayments to fund your demolish and rebuild.

  • Line of credit: a line of credit home loan allows you to borrow money against the equity in your property, up to an approved limit. To secure this type of loan, they will use your property as collateral. When you borrow on a line of credit, you can pay interest only or the amount is added to your home loan (capitalised). Once you can pay back the borrowed funds, you can borrow that amount again.

  • Home equity finance: equity is the difference between the worth of your current home and what you owe on your mortgage. It’s essentially how much of your home you own. The more you pay on your loan, the higher the equity you have on your property. Most lenders will allow you to use your property’s equity to finance your knockdown rebuild, but they may also ask to leave a buffer.

Ultimately, your individual circumstances will determine which finance or loan options are available to knockdown and rebuild your home. It’s best to speak with your existing finance provider or a broker to understand all your options. This will help you choose the most cost-effective finance option for your needs. 

Related Questions

Can I Demolish My House And Rebuild If I Have A Mortgage?

You typically cannot demolish and rebuild your house with a regular mortgage. However, special mortgages may allow that, and speaking to your finance provider is the best way to understand what renovations or modifications you can make to the property. 

When you have a mortgage, your lender has a claim on your property. If you demolish what is, in a sense, your lender’s property, they won’t have either the money or the collateral for the loan. Similar to subdividing with a mortgage, you’ll have to speak directly to your home loan provider and find out what avenues are open to you. 

Do You Need Planning Permission To Demolish And Rebuild?

In most cases, planning permission is needed to demolish and build. There may also be heritage restrictions on demolition or tree removal. So, before you demolish your house, ‌check with your local council for more information. 

The local council regulates the laws regarding asset protection and planning laws if a building is subject to planning approval. Factors like the size of the allotment or heritage overlays can prompt or influence these approvals. It is also necessary to get building approval for construction projects, which can be obtained either from a private or municipal building surveyor. Contractors can handle knockdown procedures and demolition permit processing on your behalf.

Interested in a Perth Demolish & Build Project? 

If you think a home demolition and rebuild might be the right solution for you, the next step is to get in touch with an experienced builder. 

Central Avenue Homes is one of Perth’s most trusted custom builders, specialising in the knockdown and rebuild process. With a simple six-step plan to follow, we make the process straightforward for homeowners, replacing an outdated property with your custom-designed dream home. 

Learn more about demolish and build for Perth properties or talk to Central Avenue Homes for more information.


This article is published in good faith and for general informational purposes only. It does not take into consideration your individual circumstances and does not constitute an estimate for any specific project. Central Avenue Homes does not make any warranties about the ongoing completeness, reliability and accuracy of this information. Construction costs and other financial details vary and you should always seek a specific quote. 

Greg Grainger

Greg has over 40 years of experience in the WA building industry starting as a carpenter joiner.

He is entrenched in the local industry and has served on the board for MBAWA (Master Builders Australia WA) for over 10 years and was a founding director of Wesbuilders Cooperative for over 11 years.

With this experience he is able to quote accurately on new projects without the huge increase to provisional sum allowances.

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