Is a knockdown-rebuild better than renovating?

It depends on the existing home and your goals. If the house is structurally tired, poorly oriented or needs work throughout, a rebuild often delivers a better result per dollar than a major renovation - and a full new-home warranty. If the bones are good and you only need to change part of it, renovating or extending may be cheaper. Compare both for your specific home.

Do I need a planning permit for a knockdown-rebuild?

Often a building permit is enough for a straightforward rebuild, but a planning permit is commonly triggered by overlays - heritage, neighbourhood character, significant landscape or bushfire (BMO). Demolition of an older home can itself need approval in heritage areas. A KDR-experienced builder will identify what applies early.

How do I check a builder is registered and insured in Victoria?

Every residential builder in Victoria must be registered with the Victorian Building Authority (VBA) in the right class (e.g. Domestic Builder - Unlimited). You can verify a registration by name or number on the VBA's public 'Find a practitioner' register. On any domestic building contract over $16,000, the builder must also take out Domestic Building Insurance (DBI), issued through the VMIA, which covers you for incomplete or defective work if the builder dies, disappears or becomes insolvent (6 years structural, 2 years non-structural from completion). Ask for both the VBA registration number and the project-specific DBI certificate of currency before you sign.

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A knockdown-rebuild (KDR) lets you stay in an established Melbourne suburb you love and replace an old or unsuitable house with a brand-new, efficient home. It avoids buying and selling costs, but it's more involved than an estate build - demolition, service disconnections and planning overlays all add steps a KDR-experienced builder handles routinely.

What is a knockdown-rebuild?

A KDR means demolishing your existing home and building a new one on the same block. You keep the location, schools and neighbourhood, and get a home designed for how you live now. In Melbourne's established suburbs it's popular with families who love their street but have outgrown an older house.

Benefits

Stay in your established suburb and street
Brand-new, energy-efficient home with warranty
Avoid buying/selling costs and stamp duty on a move
Design for your block's orientation and your lifestyle
No competing at auction for established stock
Often strong value uplift in sought-after suburbs

Considerations

Demolition and service disconnections add cost and time
Planning overlays (heritage, character, bushfire) can apply
Site/infill costs usually higher than estate blocks
You may need to rent elsewhere during the build
Access and tree protection can constrain the build
Finance differs from a standard new-home loan

Knockdown-rebuild costs in Melbourne (2026)

Demolition (detached house)$20,000 - $45,000+

New home (volume, ~200m²)$350,000 - $550,000

New home (custom, 250m²+)$750,000 - $1,300,000+

Build-only figures (ex land, GST). Demolition, service disconnection/upgrades, tree protection and infill site costs are additional and vary by block.

The Process

Feasibility & design

Confirm the block suits a rebuild and design the home

Permits & overlays

Planning permit (if needed) and building permit

Demolition

Disconnect services and demolish the old home

Site preparation

Site cut, services and any retaining

Construction

Slab to lock-up to fit-out

Handover

Inspection, defects and keys

What to Look For in a Builder

A dedicated KDR track record in established suburbs

Experience managing demolition and service works

Familiarity with planning overlays and permits

Clear handling of site and infill costs

Transparent fixed-price contract

Recent KDR completions you can inspect

First Home Buyers - Top tips for building your first home

38m 31s

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First Home Buyers - Top tips for building your first home

This episode is for First Home Buyers. We begin with essential finance tips and a rundown of the current government grants available. Then, we explain how to balance location with budget, and also touch on builder discussions, deposit amounts, your needs vs wants list and much more. Don't miss out on this invaluable advice for a successful first home build!

Watch full episode

Common Questions

Budget roughly $20,000-$45,000+ for demolition, plus the new build itself - from about $350,000 for a volume home to $750,000-$1,300,000+ for a custom build, build-only. Infill site costs, service upgrades and tree protection add more than a typical estate block, so get an itemised estimate before committing.