It Never Used To Cost So Much, Why?

The 10-Year Challenge. 

Clients are often surprised by todays costs for completing building work on their homes. Be it a simple extension and deck, with a new slider, to a whole new build of their forever family home. Prices have increased, and nowadays clients are often left saying “It never used to cost this much…” LC Designer Homes have listened and decided to dig a little deeper to see if we could explain why.

We’ve had a look back over the last ten years to see what has changed to see why. Here are our top 11 findings

1. Labour cost* – This is a large portion of any build, so really impacts on the overall costs. The average hourly not anymore. Skilled Tradespeople who have now completed their trade certification and have also become Licensed Building Practitioners (required for restricted building works) upwards, depending on experience. With the demand on the building industry as a whole, even first year apprentices are now charged out upward of $30.00. All of our living costs regardless of where you live in have gone up and we need to pay people a reasonable amount to meet this. On top of that, you can’t forget other staff related costs such as ACC levies, first aid courses, payroll system, the list is quite comprehensive.
2. Transport – We have to be able to get to your home to do the work. Petrol as at 26^th April 2019, is reported to be $2.36 a litre, in 2009 it was reported to have been $1.63, (both figures are from AA Fuel Watch). Similarly, diesel has gone from $1.04 to $1.50. Both have increased by approximately 40%. Not forgetting increases in the price of insurance, servicing and maintenance, compliance and security of vehicles.
3. Building Compliance – Quite a lot has changed in the last 10 years with much of it being due to significant events locally driving these changes:
   
   
   • We are all very familiar with the term ‘leaky homes’ something that has continued to hit the headlines over the years. An outcome of this unfortunate situation unfolding for many consumers, was the launch of the LBP (licensed building practitioner) scheme. Once the LBP scheme was launched in November 2007 (but not mandatory until 2012 which is why it’s on our list) following an amendment to the Building Act 2004. Its purpose is to encourage competent building practitioners to build homes right the first time. The scheme also gives consumers the necessary information to make informed decisions about the competence of building practitioners they may engage. The associated cost of running this scheme effectively is passed onto us, the builders, pushing up our overheads but making us more accountable for our work at the same time.
   • Required number of visits from the council has doubled for renovations and new builds, which has pushed up your consent cost and doubled the time we spend with Council representatives during these visits.
   • February 22^nd 2011 remains a very important date to many as sadly Christchurch experienced significant impact from the earthquake and it’s aftershocks. The effect to many of the buildings was notable and remains at the forefront of much media coverage. It’s now acknowledged that having experts such as engineers and geotech’s providing guidance and reports during the development of building projects is fundamental. Their services are now essential to the building process, even in what we used to think were the smaller and less complex projects.
4. Materials – In addition to this NZS:3604 the Timber framed Buildings Standard that is used to size timber framing for construction underwent a complete rehaul post the Christchurch earthquakes, reducing spans, resulting in more materials needing to be used in this and may other instances.
5. Health and Safety – We now have The Health and Safety at Work Act 2015, as a result of the most significant workplace health and safety reforms in 20 years, resulting in Works Act 2015 (HSWA) and the formation of WorkSafe (WorkSafe). Our sites are safer, which is great news, but we now have to include the cost of any practical steps we take to ensure we meet these reforms – with more comprehensive scaffolding and safety netting. Asbestos is also word everyone is familiar with. Many of our homes have it somewhere and it’s only when we go to do some work that it requires special attention. Firstly, we need to complete testing to categorise what type of asbestos it is and then the use of specialist firms to complete the safe removal and disposal before we can complete any building work in the area. 
6. We can’t forget about the addition of the government Goods and Services Tax was increased by 2.5% to our current 15% on the 1 October 2010.
7. Reality TV – We know you have been watching Grand Designs, Dream Home, The Block and recognise that those fabulous programs showcase some great NZ building trends. And some great people who agree to participate! They give us fresh ideas of what we would love to end up with, yet, they come with a Grand Budget Our ears prick up when clients are asked about budget at the end of these shows as 9/10 times, the budget is blown. Not something anyone wants to hear but reiterate that to have something bespoke and a little different to everyone else, this comes at a price.
8. Design – As we are a Design Build company, we are fortunate to be involved at the time you start designing and discussing your projects. We know higher ceilings, larger windows, a home office and a second living area are all elements you now want included in your home. Houses in terms of square meters, are generally larger than they were 10 years ago, outdoor living has to be factored in and we know you also need some of those special design features to really show case your own taste. Put all of this together for you and the difference starts to add up.
9. Products – First we had a single shower (possibly still over a bath), we then moved onto double shower heads, now rain head showers as part of a tile and glass stand-alone unit are what you desire. Who doesn’t love a bit of luxury? Equally we used to have additional power points, we then managed to sneak in a dimmer switch or two, now we have power points, recessed lighting, charging points for devices, full AV systems and to keep it all safe a security system- that might include a camera or two. The number of product options now available in is seriously exciting. Doors, joinery, showers, taps, so many options. Given that many of these products also require additional time from sub trades such as electricians and plumbers to install, up go their costs too.
10. Landscaping and outdoor spaces – Even if we don’t get involved in your gardens, we know that you want to keep a portion of your budget for this area. It makes sense. Sitting on your new deck is really set off by some lush garden and because you are sun smart you will have also factored some shade too. Heating, blinds, furniture, new BBQ, fire pit, pizza oven. You live in after all, you like to be outside, we get it.
11. Finishes – Previously you would have had a wooden deck with a wooden balustrade, and it would have looked something like the image below on the left. Nowadays a hardwood deck with a seamless glass balustrade and outdoor lighting is what we are asked to build, such as the deck on the right. We can’t deny that the specification difference is poles apart, we also can’t deny the cost is poles apart too.

Note – All of our sub-trades and suppliers’ costs include everything just mentioned above in numbers 1-6. And because they are like us, their costs have gone up too. 

In answer to your statement of “It never used to cost this much, why?” You’re right it never did. But at least we can explain why.

We can clearly see that the cumulative cost of all these findings has really pushed up the cost of building work for many.

What was once a simple change to your home, now might seem financially a real stretch. None of these costs are avoidable, but some we work really hard on limiting where we can.

Even the most prudent building contractor, using competitive suppliers, efficient sub trades, sophisticated technology and expert advice can only reduce costs so much.

Understanding and accepting things have changed and we can’t turn back time, or cost, is the other side of the equation.

* Minimum wage rates for 2009 Adult $12.50, 2019 $16.50- from Ministry of Business, Innovation and Employment NZ Labourers 2009 $17.67, 2019 $21.65- from Figure.nz From Statistics NZ, earnings have gone up by 35.2% for males in Auckland in the last 10 years