More Cost Advice for Homeowners

NZIQS - 18 October 2011

Canterbury homeowners considering insurance offers to support a rebuild or replacement of their Earthquake-damaged homes. You need to consider the following issues.

What type of house are you replacing?   If the insurers offer relates to a price per m2, below are some very general guideline costing figures;

$1100 per m2 to $1400 (incl. GST) per m2 range reflects “group housing company” type rates for a simple single storey off-the-shelf design house on a flat site with standard foundation design;

$1800 to $2600/m2 (incl. GST)  relates to the cost of designing and constructing a one-off design single storey home to a good standard.

$2600 – to $5000/m2 (incl. GST) would be the typical costs for an executive level designed and finished house of substantial construction, typically multi-storey or multi-level in the hill suburbs, and dependant on fixtures, fittings, and finishes.

Payouts by insurers for destroyed homes replaced on the same site need to cover the costs of any likely additional in-ground structural requirements, and the engineering design costs associated with structural foundation work .

Make sure you have an undertaking from your insurers that they will insure your new home when built. Better still arrange replacement insurance on the new home before commencing construction.  Most lenders will require this before entering into any lending arrangement. 

Replacement insurance covers the cost of rebuilding to the completion of construction, so needs to include;

• design costs,
• Construction costs inflation over the period to completion of construction,
• increased costs to meet the new earthquake design standards for Christchurch, and
• Costs of meeting the current Building Code requirements, such as for all treated framing, insulation, and double glazing,
• costs for special foundations or piles or large compacted hard fill rafts that may be required to overcome site specific ground conditions.

Note - construction industry costs in Christchurch are likely to escalate significantly over the next 2/3 years due to reduced competition, shortage of some skills and professions, increasing labour charge out rates, reduced discounting by material suppliers and increasing profit margins across the market following a very lean period. 

Quantity Surveyors are specialists in assessing construction costs related to building or repairs. However, it is also a profession with only a limited number of professionals who undertake work on residential homes.  There is frequently a shortage of qualified and experienced professionals in NZ.  If a homeowner employs a Quantity Surveyor they will need to meet the charges for their services, as the insurers are most unlikely to meet the costs of challenging their assessments of repair or replacement costs. 

For peace of mind, homeowners who have significant concerns about their house replacement offers should consider seeking professional costing advice from a suitably qualified Quantity Surveyor who can assess the repair costs or current replacement value which will include the costs mentioned above and architectural, structural, geotechnical design costs, special foundation costs, future cost escalation, landscaping and driveway costs.

For professional help try a Registered Quantity Surveyor (RegQS) ^TM (see www.nziqs.co.nz/ ) or a qualified Quantity Surveyor recognised by MNZIQS ^TM, ANZIQS ^TM, FNZIQS ^TM (see your Yellow pages).