Costs of rebuilding a flooded home to climb 20pc

The costs of replacing a damaged home in the flooded areas of south-east Queensland and northern NSW could rise at least 20 per cent by the time work starts, as the shortage of skilled labour and materials escalates, experts say.

The price tag could climb even higher, particularly for areas located farther from the major centres such as in northern NSW, warned Matthew Walker, CoreLogic’s head of insurance solutions.

“The expected range of additional cost for a full rebuild based on our past experience is in the region of 20 per cent and 50 per cent,” he said.

“In the past significant events, individual building element costs can increase by as much as 300 per cent and labour rates for specialist trades doubling or more for long periods after the event. These rates are partly a factor of the event’s location and distance to major centres.”

While the exact number of damaged homes is still being assessed, a total of 26,000 homeowners in the flooded areas have already made insurance claims, IAG says.

Experts estimate the number of flood-affected homes had risen to 30,000 so far and about 5000 homes needed to be replaced.

This is on top of the 22241 homes built each year on average in south-east Queensland and northern NSW according to the Housing Industry Association.

Construction costs have already started to escalate even before rebuilding started, said Marty Sadlier, director of MCG Quantity Surveyors.

“We have already seen a rise of around 10 per cent in construction costs in these areas due to a massive pent-up demand,” he said.

“Given the median construction cost for homes in these areas is around $485,000 – that’s an increase of around $48,500 in just a month. For some homes in the inner city of Brisbane, this could amount to $100,000.”

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