It costs 45,000 euro more than an average market value to build a three bedroom house in Dublin, a survey has found.
The Society of Chartered Surveyors Ireland, the body for construction, land and property professionals, said 330,000 euro is needed to get a new semi-detached home in the capital ready for sale but the mid-range asking prices are only 285,000 euro.
Micheal Mahon of the SCSI said action is needed to reduce costs and get building going.
“Whether they opt to reduce VAT to 9% or to zero as is the situation in Northern Ireland or to reduce finance costs to 5% or to reduce levies to 1,500 euro or to increase the supply of land, prompt and decisive action is needed,” he said.
“They may well opt for a combination of these measures. However the focus should always be on improving supply, not adding to house price inflation.”
The SCSI said construction costs for a new three bed semi-detached in Greater Dublin, including drains, sewerage and estate roads, run to 150,000 euro – 45% of the total.
It said “soft costs” including the price of land, VAT, the builder’s margins, levies, professional fees and sales and marketing costs run to 180,000 euro.
The SCSI report was based on analysis of eight live house building projects, with a minimum of 30 units, in Greater Dublin where chartered quantity surveyors were employed as independent cost consultants.
Mr Mahon said it may come as a surprise to those outside the industry to see construction costs or hard costs made up less than half of the total costs.
“The country is experiencing a chronic housing shortage which is contributing significantly to the current homelessness crisis,” he said.
“The findings of this report highlight a number of pressing issues, particularly on the soft cost side. We need to kick-start housing supply as soon as possible and to accelerate from the current output of 12,000 units per annum to the 25,000 units which is required.”
The SCSI said its analysis showed the cost of building a new house in Dublin is now 45,000 euro more than the median or mid-range asking price for a three bedroom semi-detached home in the capital in the most recent market study by MyHome.ie/Davy.
The organisation said the cost of labour, subcontractors and materials will continue to rise over the coming years while increased demand and obligations to build more energy efficient properties will also push prices up.
Mr Mahon said: “While new building techniques have reduced build time, as of yet they haven’t yielded significant cost savings.”
The SCSI said the experience of people on average wages trying to save for a home in Dublin illustrated a stark reality of the market.
Mr Mahon said: “It is clear there is a serious financial viability issue and it is difficult to see how developers can commence building in this market with particular emphasis in urban areas where the demand is highest but where land prices are also at their highest.”