Land for houses ‘prohibitively expensive’, surveyors body says

The cost of land for houses remains "prohibitively expensive", according to the Society of Chartered Surveyors in Ireland (SCSI).

The group, which represents estate agents and surveyors, said the price of land for a three bed semi-detached house is about €60,000 on average, or 20 per cent of the total cost of the property.

"There is no single solution to the current shortage in affordable housing, " said Johanna Gill, president of the industry group, launching its annual residential property review and outlook.

“Our report indicates affordability is a major issue for many prospective buyers while, on the other side, we know the viability of constructing new homes and apartments is an issue for builders.”

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“We would like to see much more emphasis on supply-side measures and cost reduction. The cost of development land here is prohibitively expensive,” she said.

The SCSI has called for a reduction in capital gains tax for zoned serviced residential land for a defined period to reduce costs. It also wants to see a reduction in VAT on new homes. “ There is no VAT on new homes in the UK and as a result construction costs there are much lower,” Ms Gill said

The SCSI also warned that investors continue to leave the rental market – with roughly two landlords selling up for every one looking to invest, according to a survey of 460 estate agents around the State.

Estate agents expect to see a significant lack of rental properties available in 2020. Fifty-eight per cent of respondents to an SCSI survey said they had experienced an increase in rental demand in the last 12 months, with only 9 per cent seeing a reduction.

According to the report the greatest mismatch between supply and demand for housing in 2020 will be in the private rented sector.

Price expectations

Overall they say more realistic price expectations by sellers has led to a period of stabilisation in the market. The SCSI is predicting that house prices will rise by 2 per cent this year, with Munster and Connacht seeing a slightly higher 3 per cent rise, and prices remaining stable in Dublin. Rents are forecast to jump another 4 per cent in Dublin the society says, and 5 per cent elsewhere.

“A period of high price inflation appears to be drawing to a close and the property market looks set for a period of price stabilisation, the SCSI says.

“The double-digit price inflation we saw in recent years was not sustainable and a return to a more stable market with modest price increases will enable buyers and sellers to plan for the future with more certainty,” Ms Gill said.

The report says it is taking, on average, 5½ months to sell a property these days, with demand low for homes at the upper end of the market. The society says delays in the paper-based conveyancing system need to be tackled.