How much does a home extension cost in Melbourne? Planning your budget

An extension can give you the extra bedroom, bigger kitchen or second living area you need without the cost and upheaval of moving. But extensions are among the biggest projects most homeowners take on, and the final cost depends on many decisions you'll make along the way.

Instead of quoting a number that might not fit your home, this guide covers what drives the cost of an extension in Melbourne, how to plan a realistic budget, and the Victorian rules about contracts and deposits. Prices vary with the design, site, materials and builder, so get detailed written quotes from two or three registered builders.

What drives the cost of an extension

Size and complexity

A simple single-storey room at the back of the house is a very different project from a second-storey addition. Going up usually involves more structural work, and you may need to move out while the roof is open. Complex shapes, big spans and lots of glazing add cost.

Wet areas and kitchens

Kitchens, bathrooms and laundries need plumbing, drainage, waterproofing, electrical work and cabinetry, so they generally cost more per square metre than bedrooms or living rooms.

Site conditions

Sloping blocks, reactive clay soils, poor access, trees and nearby easements can all affect the foundations and how materials get onto the site. Your builder may need a soil report and survey before they can price the job accurately.

Design and approvals

You'll usually need plans from an architect or building designer, and possibly an engineer. Many extensions need a building permit, and some also need a planning permit from your council, especially in heritage overlays. Allow time and budget for these.

Finishes and fittings

Flooring, windows, benchtops, tapware and lighting have a big effect on the final price. Decide early on the level of finish you want, and get it written into the plans and specifications.

Connecting old and new

Joining an extension to an older home can uncover surprises, like outdated wiring or plumbing, or roof framing that needs work. Ask your builder how they'll deal with anything unexpected.

How to build a realistic budget

Break your budget into parts:

1. Design and consultants: designer or architect, engineer, surveyor, soil test, energy rating.
2. Approvals: building permit, planning permit if needed, and council fees.
3. Construction: the builder's contract price.
4. Provisional sums and prime cost items: allowances for items that aren't fully priced yet.
5. Contingency: a buffer for surprises and changes.
6. Living costs: rent or storage if you need to move out.

Victorian contract and deposit rules

Victoria has specific rules for domestic building contracts. Consumer Affairs Victoria explains that a builder must use a major domestic building contract for work worth more than $10,000, and lists what the contract must include, on its building contracts checklist.

There are also legal limits on deposits. The Building and Plumbing Commission says deposits must not exceed 10% if the total contract price is under $20,000, and 5% if it's $20,000 or more, on its agreements and contracts page.

Victoria passed new domestic building contract laws in 2025 that Consumer Affairs Victoria says will take effect by 1 December 2026. Those changes include how deposits and progress payments are set, so check the official pages for the rules that apply on the day you sign.

Check your builder

Before you sign, check the builder's registration on the BPC's Find and check a practitioner page. Make sure the registration is current, covers the type of work and matches the name on the contract. Also ask about domestic building insurance and ask to see the certificate before paying anything.

How to compare builder quotes

Ask every builder to quote from the same plans and specifications. Then compare:

• what's included and excluded
• the size of provisional sums and prime cost allowances
• the proposed start date and construction period
• the progress payment stages
• how variations are priced and approved
• warranties and insurance

If one quote is much lower, find out why. It may leave out items the others include.

Ways to manage the cost

• Keep the design simple and work with the existing roof line where you can.
• Group wet areas close to existing plumbing.
• Make finish selections before you sign, to reduce variations.
• Avoid changes mid-build. Variations can add cost and delay.

Find a builder

Compare local businesses on our builders in Melbourne page or browse builders across Australia. You may also need architects and drafting help for the plans.

Find builders in your area

Frequently asked questions

This guide is general information only, not legal or financial advice. Rules change, so check the official sources linked above for your state.