Construction and renovation prices are rising. The sum of the house or apartment insurance can go up strongly?
In recent years (especially two), inflation has been said a lot. The prices of consumer goods, wages as well as … construction prices and construction costs increased clearly. These last two changes should have a significant impact on the value of houses and apartments in newly concluded insurance contracts.
The pace of changes on the real estate and construction market in the current decade was so fast that people insuring their housing according to the value from 3-4 years ago, risk a lot of undestration of a house or apartment that can take revenge in the event of more serious damage. The situation is analyzed by Unilinek Insurance Multiagency experts, presenting interesting data from the construction and housing market.
For 4 years, the used area has increased by about 60%
People who are uninterested in the housing market may not be aware of the scale of changes that have taken place in this market in the past decade and recent years. It is therefore worth to give the CSO statistics on the average price of 1 sq m as part of the example. residential premises sold from all over Poland. Such an average rate for 1 sq m. The apartment used in the following years changed as follows:
- 2010 – PLN 4,069
- 2011 – PLN 4,039
- 2012 – PLN 3,721
- 2013 – PLN 3,697
- 2014 – PLN 3,752
- 2015 – PLN 3,911
- 2016 – PLN 3,990
- 2017 – PLN 4,143
- 2018 – PLN 4,468
- 2019 – PLN 4,840
- 2020 – PLN 5,276
- 2021 – PLN 5,903
- 2022 – PLN 6,984
- 2023 – PLN 7,676
For the Similar data of the CSO for 2024, unfortunately we have to wait. They will probably show a lower change than the one that concerned 2023. This does not change the fact that the market value of housing real estate has increased in recent years. “As for the years 2020 – 2023, a typical used apartment from Poland increased by almost 60% per 1 sq m. The average annual rate of change was very high,” he points out Andrzej PrajsnarUnilinek Insurance Multiagency Expert.
In some urban centers, the changes in the average transaction prices of the used area turned out to be greater than the national average (examples of changes from 2020 – 2023: Wrocław – 69%, Kraków – 60%). From the point of view of the owners of many housing properties, however, the more important criterion is Replacement value And this approach seems to be the most right. “After checking the statistics, we can see that the costs of restoring houses and premises have also increased very much in recent years,” comments Andrzej Prajsnar, Uniilk expert.
Increase in replacement costs: what do the data say?
As for the reproduction value of the house or apartment, it must be recalled that we understand under this concept the sum of the costs needed to restore the insured property to the new state (unhealed). The replacement value can be defined in general insurance conditions (GTC), for example as: a value corresponding to the costs of renovation or reconstruction in the same place, taking into account the existing technology, construction and finishing standard using existing dimensions and materials.
“It is very important to pay attention to what value we have the sum of insurance (SU) in the policy. In addition to the replacement value, it can be used for older buildings real valuewhich is smaller than reproductive due to the consumption of the building. Let us also remember to always inform your agent about the general renovations, because they can significantly change the valuation of the property value, “he emphasizes Jolanta DziadowiecUnilinek expert.
Information coming from the construction market suggests that in recent years the reproduction value of housing real estate has also increased. It is hardly surprising, because the same cost changes affected the increases in the prices of the area. A lot of recently published CAS report titled “Report on costs in construction 2016-2024” can tell us a lot about cost changes in construction[i]. We learn from his reading that between the first quarter of 2015 and III quarter of 2024, the average costs of erecting buildings increased by 101%. Very large changes were also visible in a short time perspective. Consider, for example, the following periods:
- 3rd quart. 2018 – III quarter 2024 – increase in construction costs by 60%
- 3rd Q1 2019 – III quarter 2024 – increase in construction costs by 54%
- III quarter 2020 – III quarter 2024 – increase in construction costs by 51%
- 3rd quart. 2021 – III quart. 2024 – increase in construction costs by 31%
- III quarter 2022 – III quarter 2024 – increase in construction costs by 10%
- III quarter 2023 – III quarter 2024 – increase in construction costs by 5%
“The above statistics take into account the costs of erecting all buildings (not only residential). Later in the article we present information on only residential buildings, i.e. houses and blocks,” emphasizes Andrzej Prajsnar.
The years 2021 – 2023 was an avalanche increase in construction costs
In the context of changes in construction costs, you can also refer to Sekocenbud data. These statistics are used, among others, to prepare cost estimates, calculate the planned costs of construction works and estimate real estate. Information published by Sekocenbud indicates that in Q4 2023 construction costs compared to the 4th quarter of 2013 were higher about:
- 84% – result for single -family houses,
- 80% – a result for multi -family buildings.
It should be emphasized that almost two -thirds of this cumulative change fall from mid -2021 to the end of 2023. This is another information that confirms the importance of adapting the sum insured the house to building inflation. The failure of the house or apartment caused by inflation can be considerable even if the owner as the sum of insurance accepts the value of his apartment from the beginning of the current decade. “The situation does not change the fact that in 2024 the prices of building materials were stable, and mainly labor,” adds Andrzej Prajsnar.
How much should the sum insured be increased?
Adjusting the sum insured the house to inflation, increases in size prices and increases in construction costs is crucial especially in the context of great damage. If the destruction of the building is extensive, it may turn out that too low the sum insured the house or apartment will not cover all the losses. In connection with the above, the question seems justified how much percentage increase home or apartment insurance. In quite often there are also Internet users' questions about how to calculate the cost of reproducing the house.
The appropriate addressee of the questions mentioned should be an insurance agent. Among other things, because he knows the values of real estate suggested by insurers with specific parameters. Of course, these are estimates that are a starting point. This value is usually calculated on the basis of a price for 1 m2 real estate in the insured location. This shows the estimated sum of insurance for the indicated subject of insurance.
In the context of insurance sums, it is worth remembering one more issue. “For example, Ergo Hestia, in its product Ergo 7, has the option of buying a so -called clause preventive sum of real estate insurance. It consists in the fact that in the damage related to the complete destruction of the house or apartment, when the reproduction value of the house or the market value of the apartment at the time the damage is arisen is higher than the same value determined on the day of the insurance contract, the use of this clause increases the SU of real estate by 15 %” – sums up Jolanta Dziadowiec.
