For an architect-designed house extension in Melbourne, around $5,000 per square metre is a realistic starting point, and more for a second storey or a high level of finish. Independent quantity surveyor data puts architect-designed residential work in Melbourne at roughly $4,700 to $6,900 per square metre including GST across low and medium finishes. Kitchens and bathrooms sit on top of that.
So a 40 square metre rear extension at $5,000 per square metre is $200,000 before a new kitchen or bathroom goes in.
That number is a starting point, not a quote. The rest of this article is about why two extensions of the same size can land a long way apart, and which of those reasons you can control.
Why the number matters more than the design, at first
The kids are older and the house has run out of rooms. Or they have moved out and the house suddenly works against you. Or a parent is about to move in. Whatever the trigger, the question in front of you is the same: do we extend and stay, or do we sell and go?
Almost nobody can answer that without a number, and almost nobody wants to pick up the phone to get one. That is understandable. Most of the cost figures online come from builders’ price lists, quoted per square metre with no explanation of what sits inside the rate or what sits outside it.
Here is what sits inside it, what sits outside it, and the six things that move it.
Where the figures come from
I would rather show my working than ask you to take a number on trust.
Source
What it measures
Rate per square metre
BMT Construction Cost Table 2026 (quantity surveyors)
Architecturally designed residence, low to medium finish
$4,645 to $5,947, excluding GST, Sydney base. BMT adjusts Melbourne to 92% to 105% of Sydney, which with GST is roughly $4,700 to $6,900
Archicentre Australia Cost Guide 2026
New construction including extensions, shell and roof only
$2,700 to $5,100, including GST
Treat the lower Archicentre figures with care. They describe a basic shell with good site access and a simple roof. They exclude kitchens, bathrooms, service upgrades and repairs to the existing house, which is why real budgets land higher.
The six things that move the number
1. Going out or going up
A ground floor extension and a second storey are different projects, not different sizes of the same project. Archicentre flags first floor additions as costing extra, because they bring a stair, structural work to the existing house and changes to the roof. Going up can still be the right answer on a tight block, but it rarely saves money per square metre.
2. Kitchens, bathrooms and laundries
Wet areas are priced on their own because they are the most expensive rooms in any house. Archicentre’s 2026 guide puts them at:
• Kitchen: $23,000 to $49,000
• Bathroom or ensuite: $17,500 to $35,000
• Laundry: $10,000 to $19,000
An extension that is mostly a living room and one that holds a new kitchen and ensuite can be the same size and a very different price. If the kitchen can stay where it is, that is often the single biggest saving available.
3. The house you already have
The per square metre rate covers the new part. It does not cover what the new part reveals about the old part. Joining an extension to an existing house usually means some combination of upgraded electrics, new plumbing runs, heating that now has to reach further, and repairs to things nobody knew needed repairing until a wall came off. None of that is in the rate, and older houses carry more of it.
4. The site
Much of Melbourne’s south east sits on reactive clay. Under AS 2870, the Australian Standard for residential slabs and footings, your site is classified by how much the soil moves with moisture, and that classification sets your footing design before any visible part of the extension is priced. A sloping block, a narrow side access that limits machinery, or an easement along the boundary all add cost in the same quiet way. Council Approvals 101 covers where those site constraints meet the approvals process.
5. Planning controls
If your house sits in a heritage overlay, which many period homes across the inner and middle south east do, Clause 43.01 of the planning scheme requires a planning permit for external works. That means more design time, more documentation and a longer lead time before a builder can start. It also tends to shape the answer: the original façade stays, and the new work sits behind or above it. I have written about extending a period home in more detail.
6. Finish and fit out
This is the lever you control most directly. Joinery, glazing, flooring, tapware and appliances can move a project from the low end of the BMT range to the high end without changing a single wall. The useful question is not “how cheap can this be” but “where does quality matter to how we live, and where will we never notice it”. What drives the cost of a custom home goes through those choices one by one, and good design on a renovation budget covers how to spend where it counts.
The costs that sit outside the build rate
Budget separately for:
• Design and engineering. Architectural design, structural engineering and, depending on the site, a soil report and land survey.
• Permits. A building permit in every case, and a planning permit where your zone, lot or an overlay requires one.
• Home Warranty insurance. In Victoria, domestic building work over $20,000 needs Home Warranty insurance, which replaced domestic building insurance on 1 July 2026.
• A contingency. Existing houses hold surprises, and the older the house, the more of them.
For a line by line view of where the money goes, Budgeting your Melbourne build sets it out.
Where budgets usually go wrong
Rarely on the headline rate. Usually in the gap between the brief you started with and the one you needed.
“We need a bigger kitchen” is very often “we cannot have people over without one of us stuck alone at the sink.” The first answer is a rear extension with a new kitchen in it. The second is sometimes a wall moved and a bench turned around, at a fraction of the cost. Getting the brief right before anything is drawn is the cheapest decision in the whole project.
[MARK TO ADD: two or three sentences in his own words on which of the six drivers most often catches his clients out, with one real example, suburb only, no client name or figures. Delete this line if not supplied.]
Should you extend at all?
Sometimes the honest answer to “what will the extension cost” is “more than moving would”. Stamp duty, agents’ fees and moving costs are real, but so is the extension, and the right answer depends on your house, your block and how long you plan to stay. Extending vs moving lays out the full list of costs on both sides, and the renovate or relocate calculator will give you a first read in about ten minutes.
Frequently asked questions
How much does a house extension cost per square metre in Melbourne? For architect-designed work, around $5,000 per square metre is a realistic starting point. Independent quantity surveyor data puts architect-designed residential work in Melbourne at roughly $4,700 to $6,900 per square metre including GST, before kitchens and bathrooms.
Is it cheaper to build up or out? Per square metre, going out is usually cheaper. A second storey brings a stair, structural work to the existing house and roof changes, which Archicentre flags as extra cost. On a small block, going up can still be the better use of the land.
Do I need a planning permit for a house extension in Melbourne? You always need a building permit. Whether you also need a planning permit depends on your zone, the size of your lot and whether an overlay applies. A heritage overlay requires a planning permit for external works. Your council or architect can confirm which apply to your address.
Your number, for your house
Every figure in this article is a range, because every house is different. The only way to replace a range with a number is to look at your house, your block and your brief together.
That is what the feasibility study is for. Three working sessions and a cost estimate, so you finish knowing what your site allows, what your brief would cost to build, and whether extending or moving is the better decision for your household. It is a fixed fee, and it is the smallest commitment that still gets you a real answer. Here is what happens across those three meetings.
Book a feasibility consultation
Cost figures: BMT Construction Cost Table 2026 and Archicentre Australia Cost Guide 2026. General guidance only; your project will be priced on its own merits.