How much does it cost to build a house in 2022 with rising prices?

We already discussed in a previous blog post "How much does it cost to build a house", but the situation during 2022 has been so volatile due to material shortages, transport disruptions and the war in Ukraine that construction costs have risen by approximately 20%. So we thought it was very worthwhile to revisit this article and update it as "How much does it cost to build a designer house in 2022".

We have always advocated for being clear from the outset about the total investment cost, from buying the plot through to moving in. So this time we are going to discuss how much it costs to build, in 2022, a designer home like the ones you can find on our website, where construction quality is high and design plays a leading role.

It is essential to consider every cost, not only the construction itself. There are many others which, if overlooked, can drive up the final cost of the works. The number can sometimes be daunting, but it is far better to know it from the start and organise your finances accordingly than to leave the house half-finished or downgrade the quality as the works progress.

The costs you need to consider fall into six groups:

Plot acquisition

Construction (PEM and PEC)

Professional fees

Building permits

Procedures

Furnishings

As a general rule, when we talk about construction price, we refer to prices per built square metre (including the exterior walls of the home, not just the usable square metres). Here we will discuss how much it costs in 2022 to build a designer single-family home in central-southern Spain: Murcia, Alicante, Almería, Valencia, Albacete, Madrid, Granada, Seville, Málaga, Jaén… For other areas such as the Balearic Islands, an additional cost should be considered due to the difficulty of transporting materials.

All the prices we provide here are indicative and will give you a sense of the cost order of magnitude for your new home, but a detailed study of each individual case is always required. If you would like more information, write to us and we will help you with the investment study for your home.

PLOT ACQUISITION

The price range for plots is very broad, depending on multiple factors. Beyond the purchase price of the land, you also need to factor in costs such as notary and registry fees (approx. 0.5% of the purchase price) and the Property Transfer Tax (in Murcia, 8% of the purchase price).

CONSTRUCTION COST

The construction price is the largest line item in the process, and will vary depending on the quality of the home and the materials, the complexity of the construction, the characteristics of the plot and the quality of the construction company.

MATERIAL EXECUTION BUDGET (PEM)

When discussing construction, the PEM (Material Execution Budget) is always referenced. We will explain what it covers.

This figure is set by the architect and will be the minimum value of the home for paying fees, taxes, permits, etc. It depends on the use and surface area of the home and does not factor in quality or the builder's profit margin.

CONTRACT EXECUTION BUDGET (PEC)

The Contract Budget is the actual price of the works, what the builder will charge to deliver the home.

You need to distinguish between several costs:

Construction of the home: 1500-1800 €/m².

Plot preparation: 200-400 €/m².

External urbanisation (outer pavements, asphalt repair, etc.).

An approximate construction value for a single-family home like those you can see on our website can range between 1800-2500 €/m², depending on construction quality and finishes. This figure corresponds to the cost of building a single-family home of around 300 m², with high-quality finishes and a strong design focus. The cost of plot preparation will vary depending on whether you have more or fewer square metres, whether you want to include a swimming pool, whether more area is paved or instead treated with landscaping and natural finishes (lawn, gravel, soil, etc.). It is also important to know the linear metres of plot fencing and the type of fence to install. Budget around 300-400 €/m², depending on the area and complexity of the works.

The external urbanisation of the plot will depend on the condition of the site. Do you need to lower the kerb to create a vehicle entrance for the garage? Do you have water, electricity and telecoms connections at the plot edge, or do you need to bring them to the property yourself? Is the street paved? Are there streetlights?

According to regulations, we are responsible for carrying out this urbanisation work in the public space, so all those costs will also be your responsibility, and it is important to budget for them.

TAXES

You must factor in VAT, which for self-developed first homes is 10% of the contract budget.

PROFESSIONAL FEES

BASIC AND EXECUTION PROJECT

The Basic and Execution Project must be drafted by an architect, defining the entire project that will then be used to build the home: geometry, materials, construction systems, installations, etc.

The architect's fees depend on the complexity and surface area of the home, and usually range around 100-150 €/m².

It is a very small expense within the overall works, but it impacts 100% of the project, so it is important to find technicians you feel comfortable with and whose design and project management style appeals to you.

WORKS SUPERVISION

Works supervision is mandatory and ensures that the work is executed correctly and that safety measures are met. The supervision team consists of three roles:

Works Director (Architect).

Execution Director (Quantity Surveyor or Technical Architect).

Health and Safety Coordinator (Quantity Surveyor or Technical Architect).

The architect and quantity surveyor fees depend on the complexity and surface area of the home, and usually range between 110-150 €/m².

GROUND STUDIES

There are also other technical costs related to ground studies that need to be considered:

TOPOGRAPHIC SURVEY. Maps the exact geometry and topography of the plot where the home will be built. It usually costs around 350-600 €. At Srta. Rottenmeier this is included in the project's technical fees.

GEOTECHNICAL STUDY. A study carried out on site with specific machinery and analysed by geologists to determine the characteristics of the ground. This information is invaluable for architects, who need it to decide what kind of structure to use when building the home. Approximate cost: 1000 €.

TAXES

The VAT applicable to professional fees is 21% of the fees budget. The reduced rate for self-developers does not apply in this case.

BUILDING PERMITS

The permit fee is set by each town hall and varies between municipalities. There are two types of fees:

Planning permission fee: usually around 1-2% of the construction budget (PEM).

Construction, installation and works tax: usually around 3.5-4.5% of the construction budget (PEM).

In addition, while the home is being built, a bond (or a bank guarantee) must be deposited with the town hall, with a variable amount between 1000 € and 5000 €. This sum will be returned once construction is complete and it is verified that the works have been executed in accordance with the project, and that there have been no problems with the surrounding public areas (trees, streetlights, asphalt, pavements).

PROCEDURES

NEW BUILD DEED. Once the works are finished, a new build deed must be executed before a notary and registered at the Land Registry. Notary and registrar fees are set by law. Together they amount to around 0.5% of the property value.

FIRST OCCUPANCY LICENCE FEE: Town halls verify that the works have been carried out in accordance with the project submitted with the licence application.

HABITABILITY CERTIFICATE. Confirms compliance with the Autonomous Community's habitability conditions for the home. The fee is small. In Murcia it is around 23 €.

UTILITY CONNECTIONS. The standard cost is around 200 € per utility: water, electricity, gas and telecoms.

FINANCIAL COSTS: If you need bank financing, you must add the following costs:

Appraisal fees: 300-400 €

Notary and registry: 0.5% of the mortgage liability

Stamp duty (documented legal acts tax): 1-1.5% of the mortgage liability

Opening commission: 0-1% of the loan amount

Bank interest, depending on the mortgage terms.

FURNISHINGS: FURNITURE AND DECORATION

When we talk about construction cost, this usually includes built-in wardrobes, recessed lighting and sanitary fittings. But it does not include the rest of the furnishings such as kitchen, bathroom units, hanging lamps, laundry, curtains, furniture, etc. It is important to check exactly what is and is not included in the builder's budget.

This can represent an average of 10-15% of the initial construction budget, which you will need to set aside so you can move in once the home is finished.

CONCLUSION

After the detailed breakdown of all the costs to consider when building a single-family home, here is a final summary.

Construction (1800-2500 €/m²)

Construction of the home: 1500-1800 €/m².

Plot preparation: 200-400 €/m².

External urbanisation (outer pavements, asphalt repair, etc.).

Fees (200-300 €/m²)

Permits (4-6% PEM) (30-50 €/m²)

Procedures (30-50 €/m²)

Furniture: 10-15% (100-250 €/m²)

Taxes 10%-21%

In conclusion, you can have a fully finished home within a range of 1000-1700 €/m² + VAT, setting aside around 100-250 €/m² for furnishings (kitchen, furniture, curtains, etc.). This will always depend on the type of qualities and finishes, the size of the home, the type of climate-control installation, the size of the outdoor areas, the cost of permits in each town hall and the construction project itself.

Remember that the more square metres, the lower the cost per m², but the higher the total expense. So if you want to build a more affordable home, the best way to achieve it is to reduce the built m².

A good way to avoid spending more than you have available is to set yourself a maximum investment figure and tell us, the architects, the maximum available so that the entire project is geared towards not exceeding that amount.

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