The cost of building a family home has risen 7.5 per cent to as much as €161,000 in the past year, according to new figures from a leading quantity surveyors group.
A report published by Linesight on Tuesday estimates that the construction industry will be worth €21 billion to the economy this year.
The surveyor firm’s figures show the pure construction cost of an average estate home now runs at between €1,260 a sq m to €1,610 a sq m.
Linesight bases its calculation on a 100sq m (1,076sq ft) dwelling, implying a total building cost of €126,000 to €161,000 for the average family home.
Rising wages, fuelled by demand for workers, and more expensive raw materials, have pushed the cost of building a home up by 7.5 per cent over the past year from the €117,000 to €150,000 range.
Linesight – previously known as Bruce Shaw – is publishing its figures in an update to its yearly handbook, which gives a detailed snapshot of the state of the Republic's construction industry.
The data shows a similar rate of growth in the cost of building apartments, from €2,200 a sq m last year to €2,380 a sq m now.
Listed Irish house builder Glenveagh said, when publishing results for the first six months of this year, that it was seeing costs rise at about 4 per cent a year.
Rival Cairn Homes, meanwhile, calculated that “annualised build cost inflation” was 2.9 per cent when it released its interim numbers recently.
Linesight’s calculations are based on an extensive database and the construction industry regards its handbook as a reliable benchmark for costs.
The surveyors’ figures only give the cost of actually building a home, which is mainly the price of labour, raw materials, heating, plumbing and electrical installation.
The total cost of a family home can be twice that outlined in the company’s report. Other expenses, including buying the land on which the house is built, VAT, finance, professional fees, and local authority charges and taxes, can push the expense past the €330,000-mark.
Figures published by the Central Statistics Office last month showed that the average price of a home – new or second-hand – was €291,579 in May.
However, prices breached the €500,000 mark in Dublin local council areas, such as Dún Laoghaire-Rathdown. On average, people were paying €345,000 for a home in the capital in June.
Linesight indicated that the squeeze on housing is likely to continue as the rate at which builders are completing new homes has yet to catch up with demand.
“The number of dwellings completed for the first half of 2018 was 7,909, which is 30 per cent more than were built in the same period in 2017,” it said.
The Government’s development plan, Project Ireland 2040, estimates that 550,000 homes will needed over the next 20 years.
Meanwhile, Linesight indicates that the recovery in construction is set to continue. Its report notes that while there are indications of demand growing in areas outside the capital, such as Cork, the greater Dublin area remains the focus of the industry’s return.