Surge in the cost of building materials could add €15,000 to the price of a 3-bed semi

Warning that more househunters could be locked out of the market

The cost of insulation materials have increased 13% since December 2019 and 12% since the start of 2021. Picture: iStock

Housebuilders in Ireland say the average cost of a new home could jump by between €12,000 and €15,000 by the end of the year due to the surge in prices for building materials including timber, bricks, insulation and concrete.

A survey carried out by the Irish Home Builders Association (IHBA) of its members has found that increased timber prices and supply chain issues, exacerbated by Covid-19 and Brexit, have increased the cost of building materials required for the construction of new homes.

“Due to delays caused by the impact of both the covid-19 pandemic and Brexit we are seeing a significant increase in the costs associated with building materials coupled with a worrying shortage of available product," James Benson, Director IHBA, said.

"This cost increase is putting further pressure on the supply of new homes and could potentially lock even more people out of the market.”

According to the survey by the IHBA there has been an approximate increase in price of 4% in bricks since December 2019 and increase of approximately 1% in 2021. Due to Brexit, there have been large delays on bricks coming from the UK due to congestions in customs and ports. 

With industry reopening after the latest lockdown some suppliers are predicting lead times could increase to four to 15 weeks depending on the brick type.

The cost of insulation materials have increased 13% since December 2019 and 12% since the start of 2021.

Timber frame prices have jumped 15% since December 2019. The IHBA said suppliers are quoting a further 4% coming in Q3 2021 coupled with an additional 5% for Q4 2021. This could add an additional €3,000 per housing unit.

“These increased costs will have to be taken on by either the buyer or the builder. Adding these costs to house prices could limit a borrower’s ability to secure a mortgage," Mr Benson said.

"However, if these increased costs are not added to the purchase price on new homes profit margins would be halved and builders prevented from qualifying for finance to fund further houses or projects.” 

Despite these recent challenges, the IHBA said the shared equity scheme will help middle-income earners buy homes and the extension of the Help to Buy scheme offers tax relief to help first-time buyers secure a mortgage to buy or build a house. 

"We also need to see the controls on consumer credit and lending take account of the increasing cost of delivery. With further cost increases expected due to supply shortages in the second half of the year these initiatives are more important than ever," Mr Benson said.