Construction costs make up less than half the total of building a new home in the capital, a new report has found.
According to the report by the Society of Chartered Surveyors Ireland (SCSI), the average cost of building a three-bedroom, semi-detached house in the greater Dublin area is €330,000.
The construction costs – or “hard costs” – came to €150,000, amounting to less than half (45pc) of the total cost of building the house.
The remaining €180,000 consists mainly of “soft costs” such as the land and acquisition costs of €57,000 (17pc of total), VAT of €39,000 (12pc) and a margin of €38,000 (11pc).
Michael Mahon of the SCSI described the fact that the soft costs dominate the total cost as an issue the government urgently needs to address.
“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 report, titled ‘The Real Cost of New House Delivery’, is based on a study of eight house-building projects in the greater Dublin area, each containing a minimum of 30 units.
It found that the cost of building a new house in the capital is a staggering €45,000 more than the median asking price of a three-bedroom semi-detached house in Dublin, according to a property report from MyHome.ie/Davy.
SCSI also surveyed a couple, both of whom earn the average industrial wage of €37,000, and found they would be unable to afford the cost of a new house, even after drawing a maximum loan amount.
If they were to buy a three-bedroom semi, priced at €285,000, they would require a deposit of €35,000.
With a combined income of €74,000, they could draw a maximum loan of €259,000, which would allow them to purchase a property up to €294,000 – leaving them €36,493 short of the current total required to provide a new house.
“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,” said Mr Mahon.
Source: Meadhbh McGrath – independent.ie
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