Skills shortage drives up home rebuild costs

Homeowners warned to ensure they are adequately insured or they risk having to pay  proportion of the reinstatement costs out of their own pocket

Depending on the location, the average cost to rebuild a three-bed semi-detached home has increased by between €9,400 and €22,400.

Increasing labour costs and skills shortages have driven up the average cost of rebuilding a home by 6.2% over the last year, new data from the Society of Chartered Surveyors (SCSI) shows.

The SCSI figures show, depending on the location, the average cost to rebuild a three-bed semi-detached home — which is the most common house type in Ireland — has increased by between €9,400 and €22,400.

These SCSI figures are used by homeowners to calculate rebuilding costs of their home for house insurance purposes. These costs include demolition and site clearance.

While the rate of increase is still high, it has moderated down from the 12% recorded last year, and the 21% recorded in 2022 following the surge in inflation.

The North-West saw the largest increase in rebuild costs, up 10%, while Dublin recorded the lowest increase, up 3%.

However, Dublin has the overall highest rebuild cost, while the North-West has the lowest rebuild cost. According to the SCSI, the minimum base cost of rebuilding a three-bed semi-detached home in Dublin is €312,620, while in the North-West it is €247,774.

The rebuild cost in Cork increased by more than €20,000, to €280,280, while Galway saw an increase of more than €12,000, to €269,500.

Chartered quantity surveyor Kevin Brady said the construction sector had experienced “significant volatility” over the last five years but the “resolution of some shortages and supply chain issues has led to the cost of some materials moderating”. He said the price of insulation, timber and paint, for example, had “generally settled down”.

However, we are continuing to see increased costs in labour-intensive tasks such as demolition and disposal of waste material, while skill shortages across plumbing, electrical, heating and other trades are also contributing to increased costs.

Mr Brady added demand for builders throughout the country remained at an all-time high and “this is also a contributory factor to the increases we are seeing in this year’s figures”.

The SCSI is advising homeowners to ensure they are adequately insured in case of a total or partial loss situation. It also pointed out people with one-off homes or period properties will have to contact their local chartered surveyor for an assessment.

SCSI president Kevin Hollingsworth said many homeowners do not realise if they are not adequately insured, they may be penalised under their policy by having to pay a certain proportion of the reinstatement costs out of their own pocket.

“If the actual rebuilding cost of a property is €400,000 but the sum insured is for €200,000, that property is massively underinsured. In the result of a genuine claim for damage covered under the policy of €90,000 being made, the insurance company payout will only be €45,000 as the policy holder was 50% underinsured,” he said.

“In this situation, the insured party will be obliged to provide the balance of €45,000. This is something many homeowners may not be aware of. The onus is solely on the policy holder to maintain an accurate sum of insurance.”