Cost of building - pursue or give up

I'm taking a step back from pursuing my dream of building a house to check in for a minute to make sure I'm heading the right direction. I bought a house 3 years ago finally, I'm 50 and want to develop a better house in the side garden and sell my own (split the site).
Got planning, went to tender and prices were 300/400/400 in the responses. New house valued 350 on open market. Final build cost including VAT, services, contributions, fees, bank contingency etc over 500. Bank only offers 80% of lower so there's a big gap. I've only 3 years of equity so I've a few choices:

• wait a few years, build up more equity until I can afford a builder led project
• build via direct labour to match 350 budget with basic finish, upgrade over time
• give up on the dream, do a deep retrofit instead where I am

What I was thinking last night is am I mad considering building a house for over 500K and that doesn't even factor in the land value. I plan to live in it until I die but is anything worth that cost? I'm paying into a very expensive house when I should be paying into a pension more. That 200K + gap buys a lot of gas and electricity. It makes no sense from an ROI perspective. The bank is going to start looking at my age in a new way shortly too. My job could change too.

Direct Labour makes sense if delivered at the market price, I've crunched the numbers but finding trades and someone willing to take that risk with me & sign the paperwork is unlikely.

I live in a poorly built 22 year old house, typical for it's time. It will never perform as well as a near passive build but I have to ask the question is the dream worth the cost. Is perfect the enemy of good enough?

If you can't build a house for less than the market value, what's gone wrong with this country?! I'm Dublin based so maybe it's time to sell up and look elsewhere.