Thinking about giving your home a facelift but getting hit with jaw-dropping quotes? You are not alone. Renovation costs in Melbourne have climbed again, leaving many homeowners wondering if their dream upgrades are still within reach. Whether it’s a bathroom refresh, a kitchen overhaul, or a full house remodel, the costs are stacking up faster than ever.
Why Are Renovation Costs Rising?
Melbourne’s renovation market has been on an upward trend for years, but 2025 has brought another significant jump in prices. The latest figures show a 3.4% increase in construction costs over the past year – the biggest surge since late 2023. And if you’re wondering what’s driving these numbers, the answer is simple: labour costs.
Tradespeople are in high demand, and their fees have skyrocketed. Finding a qualified plumber, electrician, or builder for your home project now requires not just patience but also a bigger budget. And it’s not just labour—materials aren’t as cheap as they used to be. While some products like concrete blocks have dropped in price, others, such as plumbing supplies, electrical fittings, and steel reinforcements, have gone up by as much as 15% minimum.
Breaking Down the Costs: What is More Expensive?
If you are planning a renovation, here’s where you might feel the pinch:
- Labour Costs: Skilled tradespeople are charging more than ever, thanks to high demand and a shrinking workforce.
- Plumbing and Electrical: The price of pipework and wiring has jumped, pushing up costs for bathroom and kitchen renovations.
- Joinery and Cabinetry: Custom-built kitchen cabinets and bathroom vanities are pricier due to material costs and skilled labour fees.
- Fencing and Landscaping: Even outdoor renovations aren’t spared, with higher costs for external fencing and garden structures.
- Building Permits and Fees: Councils are charging more for approvals, adding another layer to the total renovation bill.
These increases are not just a blip on the radar; they reflect broader issues in Melbourne’s construction sector.
The Impact on Homeowners
For those planning renovations, the cost hikes mean one of two things—either stretch the budget further or scale back on the dream project. Some homeowners are opting for phased renovations, tackling one section of the home at a time rather than doing a full-scale remodel in one go.
Another trend is DIY projects, with more people taking on simpler tasks like painting, tiling, and basic carpentry to save money. However, for jobs requiring licensed professionals, such as electrical or plumbing work, there’s no cutting corners—higher costs are unavoidable.
How Melbourne Builders Are Coping
It’s not just homeowners feeling the pressure. Builders are also struggling, with tight profit margins making it harder to stay afloat. In fact, over 2,800 construction companies went under in the past year, highlighting just how tough the industry has become.
The biggest challenge? Labour shortages. With fewer skilled tradespeople available, those still in the game can charge premium rates.
Delays in sourcing materials and long wait times for council approvals also add to the headache, making renovation timelines unpredictable.
How Can You Renovate Without Breaking the Bank?
Despite the rising costs, there are still ways to renovate smartly. Here are a few strategies to help keep expenses in check:
1. Set a Realistic Budget
Start with a clear budget and add a buffer for unexpected costs—because there will be some. A good rule of thumb is to allow an extra 10-20% on top of your estimated costs.
2. Get Multiple Quotes
Don’t settle for the first quote you receive. Comparing prices from different builders and trades can help you find the best deal.
3. Choose Cost-Effective Materials
Instead of imported marble, consider local stone alternatives. Opt for engineered timber flooring instead of solid hardwood. Small choices like these can lead to big savings.
4. Time Your Renovation Wisely
Building costs tend to rise during peak periods, such as spring and summer. Scheduling your renovation for off-peak months might save you money.
5. Tackle Small Jobs Yourself
While plumbing and electrical work should be left to the pros, tasks like painting, landscaping, and minor demolition can be done yourself, reducing overall labour costs.
Will Prices Keep Rising?
The short answer? Probably. With Melbourne’s population growing and the demand for housing increasing, the pressure on the construction industry is not easing anytime soon. A shortage of skilled trades, ongoing supply chain disruptions, and economic inflation all point to continued price hikes.
That being said, some material costs have stabilised, and competition among builders might help slow down price surges in the coming years. But for now, if you’re planning a home renovation, it’s best to lock in contracts sooner rather than later to avoid further cost increases.
Is Renovating Still Worth It?
Absolutely, if done right. A well-planned renovation not only enhances your living space but also adds significant value to your property. While costs are higher, strategic choices can help keep expenses manageable. Focus on renovations that boost your home’s value the most, such as kitchen and bathroom upgrades, rather than purely aesthetic changes.
At the end of the day, renovating in Melbourne is still a solid investment, but it requires smart budgeting, careful planning, and the right team of professionals. If you’re prepared to navigate the challenges, your dream home upgrade is still within reach—just with a bit more financial planning than before.