Extension and renovation costs

[fliball123]

Rates were artificially low through monetary policy on the back of a massive economic downturn, the intention by central banks was always to raise them again and planned to do it before Covid.

I don't share the same dooms day scenario as you, I think we are now operating at a new normal of cost levels with some variability. Maybe costs go down 20% and some firms lower their profits etc. However, I don't think construction costs on residential extensions etc have increased 100% per your example. At least in my experience, I'd love for them to be cheaper.

You must be joking normal operating costs? REALLY can you quantify that statement please? I mean the government are spending billions to keep the vast majority of its population from going in to real difficulty with regards to the huge increase in the cost of living and to house its population due to the high costs of this country for rent and buying and for building a house. If this is normal operating costs then I would hate to see a scenario where we have high costs. Construction costs have gone though the roof (excuse the pun) may not be 100% increase. As I stated before why are construction costs in Ireland so much higher than the rest of our EU peers?

As for the doomsday scenario I am only relaying the information I am seeing. It can be seen from the construction PMIs and outputs and when you throw in the additional costs to borrow for both the construction companies and the customer via higher interest rates (and they are only going up) its hard not to see it playing out like this.

As for interest rates they have been low for over a decade and its now a real hit to almost every person and company in the country as everyone got used to them being low, so artificially low or not if you're paying more or less the same price for something for 10 years plus and then it balloons in price in the space of a year or so, you're going to feel it and if costs in all other areas of your spend has also rocketed up in the same timeframe and you have the option to not build an extension or leave it on the long finger for a few years then that is what most sane people will do and that is what the data is bearing out.

 

[AlbacoreA]

I'd guesstimate cost of an extension has gone up 25-35% over the last 2+ yrs. The further back you go the difference just increases. Again my guesstimate based on the work the friends and neighbours have done.

 

[DublinHead54]

You must be joking normal operating costs? REALLY can you quantify that statement please? I mean the government are spending billions to keep the vast majority of its population from going in to real difficulty with regards to the huge increase in the cost of living and to house its population due to the high costs of this country for rent and buying and for building a house. If this is normal operating costs then I would hate to see a scenario where we have high costs. Construction costs have gone though the roof (excuse the pun) may not be 100% increase. As I stated before why are construction costs in Ireland so much higher than the rest of our EU peers?

As for the doomsday scenario I am only relaying the information I am seeing. It can be seen from the construction PMIs and outputs and when you throw in the additional costs to borrow for both the construction companies and the customer via higher interest rates (and they are only going up) its hard not to see it playing out like this.

As for interest rates they have been low for over a decade and its now a real hit to almost every person and company in the country as everyone got used to them being low, so artificially low or not if you're paying more or less the same price for something for 10 years plus and then it balloons in price in the space of a year or so, you're going to feel it and if costs in all other areas of your spend has also rocketed up in the same timeframe and you have the option to not build an extension or leave it on the long finger for a few years then that is what most sane people will do and that is what the data is bearing out.

What do you expect the cost of construction to revert to, are you saying in a year you think costs will be 50% cheaper? If rates go back down, and materials costs reduce back to pre 2019 levels you're still left with wage inflation, are you expecting that to reverse, would you take a pay cut when there is a cost of living crisis?

I am speaking about extension costs which is the cost of the topic, not the broader construction industry. Whether people should put an extension on the long finger is entirely down to their own situation, not every extension is a vanity project and post covid many families now need extensions or redesigned and upgraded home to house people spending more time there. The country can't simple stop borrowing because interest rates are higher than they were.

This is just how I have assessed the situation, the current rate environment and what I can afford, and as you say if rates are only going to go up, it is better to lock in a rate now than later.

 

[DublinHead54]

I'd guesstimate cost of an extension has gone up 25-35% over the last 2+ yrs. The further back you go the difference just increases. Again my guesstimate based on the work the friends and neighbours have done.

I agree with this. At this point the price of steel / lumber has come back to almost pre-covid levels (commodity indices), but I don't expect a full reversion of the 25-35% given the wage inflation component.

 

[fliball123]

What do you expect the cost of construction to revert to, are you saying in a year you think costs will be 50% cheaper? If rates go back down, and materials costs reduce back to pre 2019 levels you're still left with wage inflation, are you expecting that to reverse, would you take a pay cut when there is a cost of living crisis?

I am speaking about extension costs which is the cost of the topic, not the broader construction industry. Whether people should put an extension on the long finger is entirely down to their own situation, not every extension is a vanity project and post covid many families now need extensions or redesigned and upgraded home to house people spending more time there. The country can't simple stop borrowing because interest rates are higher than they were.

This is just how I have assessed the situation, the current rate environment and what I can afford, and as you say if rates are only going to go up, it is better to lock in a rate now than later.

I think it will come down about 20/25% in the next 24 months. You also have to consider that its now actually cheaper for people to sell a house that needs work and buy a house that needs no work. You can see houses on daft and myhome that need serious renovations are remaining for sale for much longer periods. Rates are not coming down for at least 2 years. I would take a pay cut if the alternative was me going on the dole queue and the company I work for hitting the wall. You also have to consider Ireland cost of construction is head and shoulders above what the rest of the EU are paying.

So you see n no pain for construction companies if the majority of people put the extension on the long finger, what happens to the construction companies who provide this service in the mean time?? You have to look at the implications for an industry that has contracted 7 out of the last 8 months. The contraction started before the interest rate increases as prices had ballooned out of control.

People will stop borrowing for nice to have construction work , the vast majority of extensions will have the owner living there for a period of time so they will know themselves they can live in what they have. (the same way they will stop borrowing for the new car as the old car works it may not be great but it does the job)

We will hit a recession in the next year or 2 and price points will be under pressure and after that I can see rates coming back down.

 

[DublinHead54]

I think it will come down about 20/25% in the next 24 months. You also have to consider that its now actually cheaper for people to sell a house that needs work and buy a house that needs no work. You can see houses on daft and myhome that need serious renovations are remaining for sale for much longer periods. Rates are not coming down for at least 2 years. I would take a pay cut if the alternative was me going on the dole queue and the company I work for hitting the wall. You also have to consider Ireland cost of construction is head and shoulders above what the rest of the EU are paying.

So you see n no pain for construction companies if the majority of people put the extension on the long finger, what happens to the construction companies who provide this service in the mean time?? You have to look at the implications for an industry that has contracted 7 out of the last 8 months. The contraction started before the interest rate increases as prices had ballooned out of control.

People will stop borrowing for nice to have construction work , the vast majority of extensions will have the owner living there for a period of time so they will know themselves they can live in what they have. (the same way they will stop borrowing for the new car as the old car works it may not be great but it does the job)

We will hit a recession in the next year or 2 and price points will be under pressure and after that I can see rates coming back down.

The flip-side to that is there are houses that don't need work are selling for a premium vs those that do at least in my area.

There will be pain for construction companies just like there are for companies across industries at the minute, this does not mean it will be a replication of 2008. In fact most banks have stricter lending requirements so there shouldn't be as much leverage over lending etc.

I see there being a softer landing, there was a lot of demand vs supply of builders in the last 18 months for extensions etc especially in the Dublin area. Some of that demand has reduced but there are still people that can afford it and will continue to do it.

It won't be a cliff edge, at least in my opinion.

 

[fliball123]

The flip-side to that is there are houses that don't need work are selling for a premium vs those that do at least in my area.

There will be pain for construction companies just like there are for companies across industries at the minute, this does not mean it will be a replication of 2008. In fact most banks have stricter lending requirements so there shouldn't be as much leverage over lending etc.

I see there being a softer landing, there was a lot of demand vs supply of builders in the last 18 months for extensions etc especially in the Dublin area. Some of that demand has reduced but there are still people that can afford it and will continue to do it.

It won't be a cliff edge, at least in my opinion.

Yeah I agree ready to walk in houses are in high demand. Meaning people are coping onto the fact that those that need "doing up" will be expensive and are staying longer on the market.

Ah I cant see a cliff edge either as I said prices go up quick and are sticky coming down. Demand for construction work as I have said has contracted 7 out of the 8 months so demand has been drying up.

Anecdotally a relative of mine was looking to get work done in Oct 2021 he only had the choice of one builder no one else could come over to spec the job. Fast forward to Jan of this year he had 8 construction companies out looking at the job and they are all available to start A.S.A.P. Not sure if this is being replicated but he said that it was night and day with regards to getting someone out to spec the job.

Also things like building permits have contracting for the last year too.

Ireland Building Permits for New Dwellings - 2022 Data - 2023 Forecast

Building Permits in Ireland decreased to 1930 Units in the third quarter of 2022 from 2161 Units in the second quarter of 2022. Building Permits in Ireland averaged 3037.81 Units from 1977 until 2022, reaching an all time high of 7563.00 Units in the second quarter of 2004 and a record low of...

tradingeconomics.com

People cant afford it, a lot of people are struggling with price increases to the essentials like food and energy and a large % of the population will be ruled out of making a massive expenditure like an extension or a new car. The numbers are there to look at within the CPIs for construction which measures construction outputs.

I mean if things were so good in the country we would need no government supports to buy, rent and to upgrade a property (the SEAI grants).

 

[fliball123]

Just a further indicator to what I have been saying the EU overall contracted by 1.2% when it comes to construction output last year. The current price points for raw materials will either have to come down or this contraction will continue

Euro Area Construction Output - January 2023 Data - 1996-2022 Historical

The construction output in the Euro Area dropped 1.3 percent from a year earlier in December 2022, following an upwardly revised 1.6 percent growth in the previous period. It was the first month of contraction since December 2021, and the steepest since August 2021, due to declines in both...

tradingeconomics.com

 

[Truffade]

Be interested in some ballpark figures on the total costs, and some insights on any surprises that arose.

Looking at some of the home renovation/architect programmes on the TV the costs seem enormous on recent programmes. I hadn't watched any in a while and was just staggered at how its risen.

I'll publish the breakdown once we're done (hopefully May) but my current estimate is 160k.

 

[Browneyedgirl4]

How is your renovation work found Truffade….did you keep whiting budget ?

 

[Truffade]

I'll publish the breakdown once we're done (hopefully May) but my current estimate is 160k.

OK, we are just about done now. Final set of workmen arrived this morning and are doing upstairs flooring\doors\skirting etc.

The final cost is going to come in at about 178k.

Breaking down as:

1. Kitchen: 25k (we went reasonably high end and got good appliances)
2. Bathrooms: 28k (same comment as above - used Ripples, who are very good)
3. Stove + new fireplace: 3k (this now looks unnecessary, given the retrofit! But my other half loves it so that is the main thing)
4. Retrofit: 63k (this is net of grants of 22.5k)
5. Building works: 21k
6. Flooring\internal doors\skirting\some painting etc: 8k (the job currently underway)
7. New built-in wardrobes, presses, bookcase etc: 11k (these will be the last things to go in, probably June)
8. Overspend on retrofit: 8k (mainly due to going for higher-spec windows to front of house. They also did quite a few additional jobs for us. Very, very good team - couldn't say enough good things about them)

We will also be buying some new furniture but I don't include that here. Probably nothing too fancy given hyperactive dog + 3 kids!

It's been a long road (and an occasionally messy and dusty one) to get here but on the plus side, we stayed more or less inside our budget, didn't have to move out and feel like we got everything we wanted.
Interestingly, one of our neighbours is an estate agent and said that the above cost would absolutely be reflected in the selling price, should we be so inclined. Which we wouldn't but is nice to hear!

We don't really see the benefits of much of the retrofit yet given that we are coming into summer but one thing that is truly fantastic is that we now pretty much have unlimited hot water, all the time. No more immersion anxiety.
Still awaiting the final BER but our retrofit subcontractor is pretty confident it will be somewhere around the A3 mark.

 

[Truffade]

The revised BER was issued - A3, which we were pleasantly surprised by.

Will report back on the heating efficacy of the retrofit after next winter.

 

[askingaboutit]

OK, we are just about done now. Final set of workmen arrived this morning and are doing upstairs flooring\doors\skirting etc.

The final cost is going to come in at about 178k.

Breaking down as:

1. Kitchen: 25k (we went reasonably high end and got good appliances)
2. Bathrooms: 28k (same comment as above - used Ripples, who are very good)
3. Stove + new fireplace: 3k (this now looks unnecessary, given the retrofit! But my other half loves it so that is the main thing)
4. Retrofit: 63k (this is net of grants of 22.5k)
5. Building works: 21k
6. Flooring\internal doors\skirting\some painting etc: 8k (the job currently underway)
7. New built-in wardrobes, presses, bookcase etc: 11k (these will be the last things to go in, probably June)
8. Overspend on retrofit: 8k (mainly due to going for higher-spec windows to front of house. They also did quite a few additional jobs for us. Very, very good team - couldn't say enough good things about them)

We will also be buying some new furniture but I don't include that here. Probably nothing too fancy given hyperactive dog + 3 kids!

It's been a long road (and an occasionally messy and dusty one) to get here but on the plus side, we stayed more or less inside our budget, didn't have to move out and feel like we got everything we wanted.
Interestingly, one of our neighbours is an estate agent and said that the above cost would absolutely be reflected in the selling price, should we be so inclined. Which we wouldn't but is nice to hear!

We don't really see the benefits of much of the retrofit yet given that we are coming into summer but one thing that is truly fantastic is that we now pretty much have unlimited hot water, all the time. No more immersion anxiety.
Still awaiting the final BER but our retrofit subcontractor is pretty confident it will be somewhere around the A3 mark.

hi, for you kitchen would you mind to share a breakdown and some details (areas, island, #cabinets, worktop material, etc.). we are looking to install a new kitchen and are trying to work out what a good budget would be. no worries if you don't have the details handy or if you not comfortable sharing.

 

[Truffade]

hi, for you kitchen would you mind to share a breakdown and some details (areas, island, #cabinets, worktop material, etc.). we are looking to install a new kitchen and are trying to work out what a good budget would be. no worries if you don't have the details handy or if you not comfortable sharing.

I don't remember them breaking it out between worktops, cabinetry etc to be honest - Mrs Truffade handled the kitchen.

The appliances were approx 7k if I remember right.
To be honest, easiest thing to do is go to one of the kitchen companies and get them to quote you. It's free and will give you a much better idea of what the cost for your own space and preferences might be.

 

[Truffade]

The revised BER was issued - A3, which we were pleasantly surprised by.

Will report back on the heating efficacy of the retrofit after next winter.

The house has been very cosy all winter - we probably keep the thermostat lower than most at 18 degrees upstairs and 19 down. The airflow has been good too, never any 'staleness' in any of the rooms.
Very glad we did this!

 

[askingaboutit]

I don't remember them breaking it out between worktops, cabinetry etc to be honest - Mrs Truffade handled the kitchen.

The appliances were approx 7k if I remember right.
To be honest, easiest thing to do is go to one of the kitchen companies and get them to quote you. It's free and will give you a much better idea of what the cost for your own space and preferences might be.

that makes sense, i will try that. thanks for the information on all the other aspects of your project too, it is very helpful

 

[kevgaa]

Hi Truffade,

Just wondering did you install a MVHR system as part of the retrofit?
Also how are the electric bills from the heat pump?

Waiting on tender returns but still undecided about a heat pump vs Gas.

 

[Truffade]

Hi Truffade,

Just wondering did you install a MVHR system as part of the retrofit?

No, contractor advised we didn't need it. Experience to date would suggest he was right!

Also how are the electric bills from the heat pump?

Pretty good, think about €650 for the last 4 months in total which would presumably be the peak months for usage. Family of 5.