The cost of building a three-bedroom semi-detached house in the greater Dublin area has increased by €41,000 over the last four years, a new report has found.
The cost now stands at €371,000, an increase of 12% compared with four years ago.
The Society of Chartered Surveyors Ireland (SCSI), which published the report, said the increase has been largely driven by a rise in hard costs, including bricks and mortar, which jumped by 19% or €29,000.
Meanwhile, soft costs, which includes land, development levies, fees and vat, increased by just 7%.
The Real Cost of New Housing Delivery 2020, which is based on a detailed study of 30 sites in the Dublin area, found that hard costs came to €179,000 – or 48% of the overall cost of providing a new house.
The report identifies a number of contributory factors for the increase in hard costs including the introduction of new building and compliance regulations as well as increased labour costs and general inflation.
New private housing supply will only increase to meet demand when the affordability/viability issue is placed at the centre of housing policy developmentMicheal Mahon, SCSI
The most significant increase in costs includes drainage, water connections, landscaping and paving.
On average, the cost of site works is approximately €40,000, an increase of more than 43% since 2016.
Structural costs increased by more than 15% – more than €7,400 per unit – due to the costs of increased fire regulations and additional supports.
Micheal Mahon, incoming president of the SCSI, said the housing crisis will not be resolved until the balance between affordability for buyers and viability for developers is addressed by the Government.
“New private housing supply will only increase to meet demand when the affordability/viability issue is placed at the centre of housing policy development and, critically, it must be based on a detailed examination of the real costs of housing delivery,” Mr Mahon said.
“If the Government is serious about tackling the housing crisis and building the 30,000 to 35,000 homes which are required, it needs to tackle the significant increases which have occurred in housing delivery costs as a matter of urgency.
“The current model will not deliver the volume of homes we need, which is between 30,000 and 35,000 a year. There is a major affordability gap for first-time buyers trying to purchase a home in line with Central Bank of Ireland regulations and this gap raises serious questions over the viability of new house building.
“The SCSI does not believe there is a single solution to this problem. That is why we are advocating a multifaceted approach, including the establishment of a commission on housing – as set out in the Programme for Government – to review the tax treatment of new housing. VAT makes up 12% (€44,000) of the total cost of a new home, in the UK there is no VAT on new houses.
“The commission would also examine the cost impact of the public procurement process, and review best practice in relation to new regulations and how the cost implications, particularly in the area of water connections and other utilities, can best be managed.
“All new regulations and statutory measures should undergo an independent cost-benefit analysis to assess their cost impact and potential benefits to the consumer.”
The report highlights that the cost-saving differential in the delivery of private housing compared with social housing can be within the range of €140,000 to €160,000.
The SCSI figures suggest that social housing can be delivered within the range of €210,000 to €230,000 per three-bedroom semi-detached house in the greater Dublin area.