Dealing with incline from back door to fence
I assume this is going to be a slab on grade house.
I assume the plan is for rain drains which feed into a perimeter drain which goes out to the city storm drain.
A 1m tall retaining wall is nothing.  A nice flat backyard is good.
Unless your lot is down slope from many other lots and there is a natural tendency for water to run into your yard and your neighbors don't have good drainage I like your general plan.  Even if there was a drainage issue, as long as your house is protected with perimeter drains, you could cheaply add more drainage and hook into your perimeter drain.  Leave a 1' wide area over your perimeter drain in the backyard to serve as drain rock and easy drainage should the backyard get more water than is desired.
Cost to excavate 1m should be pretty minimal ( assumes that isn't 1m of bedrock and there aren't truck sized bolders in that 1m ).
The biggest expense is likely to be the larger retaining wall and the extra coordination with the neighbors depending on how you site the wall and how you site the fence with relation to the wall.