A fixed-price contract commits the builder to completing your home for a set price, regardless of cost movements. However, the term ‘fixed-price’ requires careful scrutiny in 2026, as several contract elements can undermine this assurance.
What should I watch for in the contract?
Be aware of escalation clauses that allow cost increases above a certain threshold, provisional sum items which are estimates rather than fixed costs, and prime cost items for fittings and finishes that are subject to variation. Builders may also include conditions allowing them to pass on material cost increases.
How much should I spend on legal review?
Spend $600 to $800 having a solicitor review any building contract in Officer, Pakenham South, or Clyde North before you sign. This is one of the best investments you can make in the building process.
Are Melbourne builders still at risk of going bust?
While the worst of the collapse wave hit in 2022 to 2023, the risk hasn’t disappeared. Some volume builders are still carrying legacy contracts priced before the recent cost surge. Before signing, confirm the builder has current domestic building insurance and is a current HIA member in good standing.
The honest reality
A genuinely fixed-price contract is becoming harder to find. Many contracts labelled ‘fixed-price’ contain enough loopholes to shift significant cost risk onto you, the homeowner. A solicitor’s review is not optional – it’s essential to understand where you stand.
Questions to consider
- What specific escalation clauses are included, and what is the threshold for cost increases?
- How are provisional sum items defined, and what is the potential range of costs?
- What evidence can the builder provide of their financial stability and track record of completing projects?
Talk to KR Peters for a straight-talking appraisal with no obligation.
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Market information is general in nature and reflects conditions
at the time of publication. For advice specific to your property,
contact KR Peters.