Caution is being urged by all players in the property sector
regarding homeowners using insurance companies' online
calculators in trying to assess the rebuild value of their
Far from even being ''indicative'', examples of recent house
sales in Dunedin and their respective rebuild costs differed
hugely when run through an online calculator. As house
policies come up for renewal over the next year, insurers
will be switching from offering unlimited replacement cover
on homes to the homeowners deciding on a sum insured, based
on replacement cost per square metre.
Be it insurers, builders, valuers or quantity surveyors, all
are highlighting that the online calculators are
''indicative'' only, and should a claim be made in the
future, based on an online calculation, there is no liability
if the assessment falls short on the actual cost.
Three vastly different houses, in the same Dunedin suburb,
had their estimated rebuild costs calculated online,
revealing little in common with actual sale prices.
The most expensive house, on a steep section which included a
large driveway, retaining walls and fences and multiple
bathrooms, was 136% costlier to rebuild than its last sale
price, which was achieved just after the height of the
building boom in 2007.
Vero's head of corporate affairs and marketing, Ron Burke,
said the insurance companies were providing the online
calculators but saying they were ''indicative'' only because
it was not possible to provide an online facility which could
take into account every possible option.
''Anyone who has built a house or done a renovation knows how
much variation there is when you get quotes for work or price
individual items,'' Mr Burke said.
He said current owners and prospective buyers were usually
well aware of property values and could get information about
property values from a range of areas including real estate
companies or professional valuers.
Tony Chapman is the director of Chapman Consultancy, a
registered public valuer of commercial and residential
buildings in Dunedin, said there was little relation between
purchase costs and an online rebuild cost.
He noted a client had recently used a reputable and easily
accessible online calculator to come up with a value for a
pending property purchase.
The difference between the online calculation and that of a
registered valuer was $100,000, Mr Chapman said.
''This [online calculation] was just applying a set of
statistics taken from a suburb over time,'' he said.
Does the cost of a house reflect its rebuild cost?
(Online calculation of three homes in same Dunedin
House A: The online rebuild cost was 46% higher, or $153,000,
than the last sale price. Equates to $3746sq m replacement
House B: The online rebuild cost was 20% lower, or $53,000,
than the last sale price. Equates to $2383sq m replacement
House C: The online rebuild cost was 136% higher, or
$662,000, than the last sale price. Equates to $6377sq m