Labour costs and skills shortage are continuing to drive home rebuild costs in Ireland, according to the Society of Chartered Surveyors Ireland (SCSI) which has urged homeowners to check that they are insured adequately.
The latest House Rebuilding Guide, published by the SCSI, shows that average costs nationally to rebuild a home, including demolition and site clearance, have increased by an average of 6.2 per cent over the past 12 months.
While this is half the 12 per cent rate of increase recorded last year and well down on the 21 per cent increase recorded in 2022, rebuild costs here remain high and are continuing to rise on the back of high construction costs, said the society.
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Rebuilding costs have jumped 54 per cent over the past five years. That means homeowners who have not adjusted the building element of their home insurance policy could be substantially underinsured.
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“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,” said chartered quantity surveyor Kevin Brady.
“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,” he said.
“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,” said Mr Brady, noting SCSI members are saying the demand for builders throughout the State remains at an all-time high. He also cited the introduction of the new concrete levy as a cost-driver.
The SCSI urged homeowners to take the time to calculate the correct reinstatement cost for their home using its free House Rebuilding Calculator, as the cost of rebuilding can vary based on property type and location. As the calculator only allows for standard buildings and fittings, many homeowners will need to make an additional allowance for the higher spec of their homes.
Dublin has the lowest year-on-year increase in rebuild costs in this year’s survey at 3 per cent but it still costs more per square foot to build in the capital than anywhere else countrywide. Costs were lowest in the northwest.
The SCSI estimated that the minimum base cost of rebuilding a three-bed semi-detached home is now €312,620 in Dublin, while the minimum base cost of rebuilding a similar house in the northwest is €247,744 — a difference of close to €65,000.
However, the annual rate of increase in costs in the northwest was the highest at 10 per cent.
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SCSI president Kevin Hollingsworth said two related issues that come up regularly regarding insurance are consumers underinsuring their property and underestimating the cost of reinstating the property.
“Many homeowners do not 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,” he said.
“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 policyholder was 50 per cent underinsured,” said Mr Hollingsworth.
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