Build from the plans and don’t change them if you’re cost sensitive

A recent article from Stuff – you can read the full story here >

Forget prices per square metre – a new-build house can easily double in cost depending on the demands of the purchaser, builders say.  The cost of building in New Zealand has been hotly debated in recent weeks.

Earlier this year, Deloitte produced a report for Fletcher Building that showed construction costs were similar in New Zealand and Australia, and in some cases could be cheaper here.

And Julien Leys, chief executive of the Building Industry Federation, said New Zealanders’ desire for bespoke builds was pushing up the price people paid.

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According to QV Costbuilder, the average 2018 construction cost for a 150 sqm three or four-bedroom house was $310,315 in Auckland, $311,250 in Christchurch, $282,190 in Dunedin, $289,690 in Waikato, and $285,940 in Wellington.

But Mike Lough, of Cambridge Homes, said those averages masked how variable a build price could be. His firm had recently built three houses that were all roughly 240 sqm. But without considering the cost of the land, one cost $1.38 million to build, another $957,000 and the third about $700,000.

The difference was in the detail, he said. The most expensive was customised to every detail, with concrete walls pulled into place on site, and $85,000 kitchen and Italian fixtures and fittings throughout. In builds such as that, every issue that the builders confronted would be new, and the solutions they devised would probably never be needed again, he said.

Lockwood offers prefabricated options.
Lockwood offers prefabricated options.

The $957,000 version was built on the side of a hill with a high-end cladding system, significant decks and lots of glass balustrades.

The $700,000 was a more standard plan on a flat site, built in brick and weatherboard, with a tiled roof and windows up under the soffit so there was less steel required.

He said a standard house bought off builders’ plans would be designed from the ground up to be cost-effective. It should be possible to build such a house where the only additional cost was related to any earthworks needed to get the site ready for building.

But as soon as people started making changes from the plans – different roofing options, different cladding options, or designing a whole new plan – things became more expensive.

A standard traditional red brick might cost 80c per brick. But people would often want different colours which could push the price up to $1.80 per brick. “It’s a more than 100 per cent increase for exactly the same house, but in a different colour.”

Having a second storey also added cost, he said. “Every time you build on a second storey you’re paying more per square metre than you are on the ground floor.”

Work on a second storey would cost about 17 per cent more than on the ground.

Mike Lough says talking about costs per square metre can be confusing for buyers.
Mike Lough says talking about costs per square metre can be confusing for buyers.

“A $500,000 house becomes $600,000 because it’s two levels.”

If an architect included overheight joinery it would make the house more expensive – adding 20cm to doors could add $5000 to the cost of a build.

John Tookey, head of department at AUT’s school of engineering, built environment, mathematical and computer sciences, said people could not expect that if they needed a truss, for example, that was 30 per cent longer, it would be 30 per cent more expensive. “It makes it a hell of a lot more expensive.”

Homeowners Tanya Sinclair and Glen McKenzie said they knew they wanted to go with a building company when they built their new home.

“We knew what we wanted for the site and we knew that going through a building company was going to be a lot more cost-effective than going to an architect and an individual builder, Sinclair said.

Going to a building company also helped secure finance for the project, she said.

They took a plan from Fowler Homes and adjusted it slightly. That added about $500 in cost to the total build. Sinclair said, when they were shopping around, they noticed that other companies were not so lenient – some would charge $200 for a change being made, on top of the cost of whatever the change was.

Buyers can sometimes get a cheaper deal again with something such as a prefabricated Sunshine Home.

These retail for as little as $140,000 for a three-bedroom home, although this price does not include delivery, piling, land costs or any other costs associated with connecting it to services.

Prefab NZ said that building offsite could reduce construction time by 60 per cent and save about 15 per cent of the construction costs. But chief executive Scott Fisher said there would be minimal direct cost savings in prefabricating a bespoke design. Quality was better in offsite construction because it provided a controlled environment, he said.

“The specifications around the build are much more precise and accurate and can be followed easily in a controlled environment than onsite.” Improved quality could deliver cost savings in the way of energy efficiency and long lasting materials. Speed of manufacture also saved money because it meant people could get out of rental accommodation faster or reduce the time needed for bridging finance.

Lockwood Homes managing director Andrew La Grouw said the main financial benefit of factory-built homes was they had a very low risk of cost blow-outs, due to being built in a controlled environment. However, there were some limitations to factory builds, he said. Lockwood did not install tiling in ready-built homes because it would not transport well.

New Zealand Institute of Architects spokesman John Walsh said there were a range of potential benefits to offsite construction. But there were also potential downsides such as reduced design options and materials, dependence on lower-skilled labour at expense of higher-skilled builders and the potential to not retain value.

“Such houses may, fairly or unfairly, be characterised as inferior because they are relatively inexpensive,” Walsh said.

“New Zealanders have tended to be quite individualistic in their housing preferences, and kitset houses will look like other kitset houses, and for that reason might be less desirable to future buyers.”