The average cost of delivering a new three-bed semidetached home in Dublin has risen by €90,000 to €461,000 in just three and a half years, according to the Society of Chartered Surveyors Ireland (SCSI).
The group also calculated that first-time buyers, individuals or couples, purchasing a new three-bed unit in Dublin with a mortgage now needed a minimum total salary of €127,000.
The industry body’s latest survey of construction costs suggested the cost of building a basic three-bed house in a multi-unit scheme ranged from €354,000 in the northwest, the cheapest region, to €461,000 in the Greater Dublin Area (GDA), which includes Dublin and the commuter belt counties of Meath, Kildare and Wicklow.
The costs recorded in the GDA represented an increase of 24 per cent on the €371,000 estimated in a similar survey in 2020 and almost 40 per cent on a 2016 survey.
The SCSI said the increase over the last three years was driven by a combination of so-called “hard costs” – bricks and mortar, which were up 27 per cent or €49,000 on average, and “soft costs”, including land, development levies, fees, VAT and developers’ margin, which rose by 21 per cent, or €41,000.
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The average cost of delivering a three-bed semidetached home nationally by the private sector was put at €397,000.
Micheál Mahon, one of the report’s authors, said the impact of Covid and the conflict in Ukraine have been the main contributors to the increase in hard costs.
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Hard costs, which also include house-building costs, siteworks and site development, ranged from just over €198,000 in the northwest region to just over €228,000 in the GDA, representing approximately a 15 per cent differential.
He said the main drivers of rising hard costs were energy, fuel and shipping costs.
The SCSI’s report said soft costs ranged from approximately €156,000 in the northwest region to just over €233,000 in the GDA. The primary soft cost drivers have been land costs, financing due to higher interest rates, levies and an uplift in the cost of professional fees, it said.
The report also assessed affordability from the perspective of first-time buyers with an average combined salary of €95,000 taking out a mortgage with the support of the Government’s Help to Buy scheme.
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The midlands and the northwest were found to be the most affordable regions for purchasing a new home, while the GDA, Galway and Cork regions were found to be most unaffordable.
The combined minimum salary levels required to purchase a new three-bed-semi-detached house ranged from, on average, €127,000 in the GDA and €115,000 in Galway to €85,000 and €87,000 in the northwest and midlands, respectively. The assessment was made using “averaged market value data”.
Mr Mahon said the SCSI’s analysis showed that Government supports aimed at addressing viability and affordability were “making a noticeable impact”.
SCSI president Enda McGuane said while there had been a significant increase in the supply of new housing under the Government’s Housing for All strategy, “it is important that we update those targets considering Ireland’s population increases”.
He said the targets were based on the 2016 census, and the population has grown by 8 per cent since then. “Therefore, targets need an immediate revision based on the most up-to-date census figures,” he said.
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