Construction costs are adding to the prices of new-builds, say surveyors

A new report from the Society for Chartered Surveyors in Ireland (SCSI) shows that construction tender prices have risen by 2.6% in first half of 2017. 

Furthermore, surveyors predict prices will rise by a further 3.6% in second half of the year. This would lead to a total estimated increase of 6.2% over the year, on top of a 6.3% increase in 2016. It is a continuation of an upward trend that has been in evidence since 2011. Construction costs have an obvious knock-on effect on new home prices. The report estimates that the current rises will bring average house prices countrywide back to levels last experienced in 2004. As expected the highest rise is in the Greater Dublin Area (GDA).

The society has already warned that, failing the government entertaining “a range of radical and potentially unpalatable policies”, it is likely that Ireland will not meet the demand of 35,000 homes required to satisfy current housing market demand until 2026. One of the policies it has suggested, is reducing the VAT rate – a measure which would obviously be resisted by the exchequer. The government has committed to building 3,000 new social housing units by 2018, but given supply constraints SCSI are witnessing on the ground, it cannot see how these will be delivered.