Home rebuilding costs still rising, but much more slowly

Consumer Interests: Inflation and skills shortages means the cost of demolition, site clearance and house rebuilding has jumped significantly

Due to covid, the war in Ukraine, high energy prices and supply chain issues, the construction market experienced significant volatility over the last five years

The latest House Rebuilding Guide published by the Society of Chartered Surveyors Ireland (SCSI) shows that national average rebuild costs, which include demolition and site clearance, have increased by an average of 6.2% over the past 12 months. This is almost half the 12% rate of increase recorded in 2023 and is well down on the staggering 21% increase recorded in 2022.

The fact that rebuild costs have only increased by 6% won’t offer much comfort to anyone in the market for a house. The combination of double-digit increases over previous years means that prices are putting home ownership beyond the reach of tens of thousands of us.

Chartered Quantity Surveyor Kevin Brady says that labour costs and skills shortages are to blame for these rising costs.

“Due to covid, the war in Ukraine, high energy prices and supply chain issues, the construction market experienced significant volatility over the last five years. The resolution of some shortages and supply chain issues has led to the cost of some materials moderating — the price of insulation, timber and paint, for example, have 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. SCSI members are saying the demand for builders throughout the country remains at an all-time high and this is also a contributory factor to the increases we are seeing in this year’s figures.”

Regional variations

This year’s guide shows that increases in rebuild costs range from 3% in Dublin to 10% in the north-west. Although Dublin recorded the lowest increase, the capital has the highest rebuild costs while the north-west has the lowest.

In Dublin and Galway, rebuild costs grew by 3% and 4%, in Limerick and Waterford the figures were 5% and 6% respectively, while at the higher end the rises ranged from 8% in Cork and the north-east to 10% in the north-west.

Kevin Brady says that these regional variations arise because of differences in the demand for builders and tradespeople.

“Higher increases were reported in Dublin some years back, and it clearly has the highest rebuild costs now. This probably explains why the rate of increase there is somewhat lower, but demand for builders in Dublin and the commuter belt remains very high. Cork has experienced a boost in activity over the past two years and that is reflected in higher rates there.”

Mr Brady says that the north-east is currently experiencing significant development, and the increased pressure on labour has created this cost spike.

According to these figures, the minimum base cost of rebuilding a three-bed semi, the most common house type in the country, is €312,620 in Dublin (98sqm x €3,190) while the minimum base cost of rebuilding a similar house in the north-west is €247,744 (98sqm x €2,528) — a difference of close to €65,000.

Insurance hit

These figures aren’t solely of relevance to those in the housing market of course. If your home insurance is up for renewal this month, you’ll need to know the correct reinstatement cost based on house type and location.

“Homeowners need to ensure their house is adequately insured so that in the event of a total or partial loss situation…they are covered under their insurance policy when reinstating or rebuilding. For example, rebuild costs for a three-bed-semi … have increased over the past 12 months from €9,400 to over €22,500 depending on where you live.”

Mr Brady notes however that while these increases are significant, it does not necessarily mean premiums will increase on a pro-rata basis.

“It’s really important for homeowners to put aside 10 minutes to use the SCSI Home Rebuild Calculator, which is free — to get an accurate reinstatement figure and ensure their home insurance is up to date. If it’s not, they need to contact their home insurer.”

Kevin Brady of the SCSI said: '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.'

He says that some insurers are now auto-adjusting insurance policies on an annual basis, and homeowners need to satisfy themselves that any quotes they receive are aligned with current rebuild rates.

The other point to make here is that these rebuild figures are based on estate-type houses. People with one-off homes or period properties are advised to contact their local chartered surveyor. A list of chartered quantity and building surveyors who carry out these assessments is also available on the SCSI website.

SCSI president Kevin Hollingsworth says that many homeowners don’t realise that 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 event of a genuine claim for damage covered under the policy of €90,000, the insurance company payout will only be €45,000 as the policyholder was 50% underinsured.”

And if you’ve extended the house or added a garden office since your last renewal, don’t forget to take that into account as well.

“The other issue we often see is people underestimating the cost and scale of reinstatement works. In 2023, a client whose home was flooded in storm Antoni believed that because the water was only in the house for a short time, that they would simply be able to mop it up and reoccupy the property.”

The reality of course is that plasterwork and kitchen fittings rarely come out of that kind of immersion unscathed.

Mr Hollingsworth continues: 

It was a devastating reality check for this client that they would have to leave the property for a number of months. This was compounded by the realisation that due to rising rebuild costs, they were underinsured. 

"So I would urge all homeowners to take the time to check they are adequately insured. It won’t take long and it is time well spent.”

Equally of course, over-insuring your house is a waste of money. You’ll end up with an unnecessarily high premium without incurring any additional benefit in the event of a claim.

The SCSI’s House Rebuilding Calculator and the 2024 Guide to House Rebuilding Costs is available free at https://scsi.ie/calculator.