Interesting chat with Suncorp

[plusnq]

Hi

Just had an interesting chat with Suncorp whilst insuring a new purchase. The replacement cost calculator worked out that it would cost a shade over $800K to rebuild the property in basic level ($689m2 of building). The property only cost a shade over $600K with land and has recently been refurbished

This must make existing stock so much more attractive atm then new builds.
Just thought I'd share it as I found it interesting.

Cheers

Shane

 

[letiha]

How big is the house.

The 4 houses we have just built, you could get nothing established for even close to the cost of building.

 

[MarkB]

Roughly $1,160 per square metre.

Which isn't too bad.

Replacement costs for insurance [should] always err on the conservative side because they have too allow for site clearance fees, design fees, etc.

 

[Gremlin]

Shane,

Just remember that the 'replacement cost calculator' isn't the same as the 'what does this cost to build from scratch' calculator. What they are calculating is a 'sum insured' - ie the maximum amount they'll pay out on in a claim.

For insurance purposes, as well as building costs you'll also be needing to consider:

* Cost of demolition and removal of rubbish.
* Cost of temporary accommodation for your family (or lost rent if an IP).

They also need to factor in that there may be significant increases in the cost of building at the time you want to make a claim. I read that building costs jumped massively in Canberra after the Duffy bushfires. Ditto with Innisfail after the cyclone. Simply because everyone insured wanted their homes rebuilt all at the same time and the builders could name their price.

Also, there's the issue that the higher sum insured they quote you the more premium you pay - the cynic in me would believe that the general public don't know what to insure their home for. As a result, if the insurer overstates the sum insured it's an easy way to boost their profit margin.

 

[lizzie]

aami don't even give you a figure anymore - they just enter all the info regarding the house and you are insured for "replacement of ... "

 

[Celeste]

Hi all

One thing to keep in mind when insuring building &/or contents is that:

If you in the eyes of the insurance co. are under insured ie: if you are insured for $200k and they believe / value / calculate that it is valued at $250k = they will deem you are only insured for 80% of the value and pay on that basis. Therefore if the house burns down to the ground they will only pay out 80%. This info was straight from the assessors mouth........

It's best to be a little over insured than under.......

I found this out when I had a house fire in 92. luckly, as the house was in the bush so to speak, I made sure I was insured for more than I thought, as I feared a bush fire (one went through when we were building). and the loss of everything...........

I also made sure it had rent elsewhere cover in the event I could not live there, which was the case. I had to rent for near on 12mths whilst they re-built it. The insurance co. payed the lot.

Can you imagine paying the mortgage and rent........

 

[plusnq]

Thanks for the tips.

Letiha

I suppose it may depend on the size of the building and area. As an example friends of mine bought a new $1m house in Bardon becuase the cost of a reno on their own property in Brisbane was equivalent . Interested in your own experience and where it was?

Cheers

Shane

 

[Aaron Sice]

Roughly $1,160 per square metre.

Which isn't too bad.

Replacement costs for insurance [should] always err on the conservative side because they have too allow for site clearance fees, design fees, etc.

you kidding? $1100 a sqm is bloody great!!!

 

[Ian (WA)]

Try $3400/sqm for a galv iron 3x2 shitbox in Karratha (Rapley Wilkinson).

Cheers,

Ian

 

[lizzie]

Try $3400/sqm for a galv iron 3x2 shitbox in Karratha (Rapley Wilkinson).

Cheers,

Ian

$2,500/m of that is freight to get the materials out there and cover the empty load coming back.

 

[silversands]

Hey Letiha,

I suspect you created a great deal of equity in the 4 recent builds. Why? I am going to guess that land prices have rocketed along since you purchased and as you'd be aware build cost may be substantially higher this year. -Happy to be corrected if I guess wrong. Sorry, don't know your build suburb.

On the two builds we initiated last year (approx April07 purchased the two blocks) we amassed not far off $200k total equity. We wanted to repeat the exercise this year (same suburb) but we wouldn't even pull the skinniest profit out of the deal. Land cost now up in the same area by over $55-60k per block and build cost as of Sep 1 up nearly $24k. Now how does the cost of established stack up? According to current listings on the market we could buy cheaper (from a couple of distressed sellers in the area anyway.)

What a difference a year can make. Wish we had purchased another block back then!

If things are different at your end, will you let us know? Sure could use a pointer to a profitable build n sell, as we can't find anywhere to do it down here!

ATB... Jodie