The last word

THE REAL COST OF NEW HOUSING

THE SCSI’S ‘REAL COST OF NEW HOUSE DELIVERY’ 2020 ANALYSES AND EVALUATES REAL MARKET DATA ON 30 LIVE PRIVATE RESIDENTIAL DEVELOPMENT SITES IN THE GREATER DUBLIN AREA.

Delivery versus affordability Four years on from the SCSI’s first housing delivery cost report, affordability remains a fundamental issue. The working group compiled a case study based on an average salary in Dublin and lending capacity based on Central Bank rules. The results depict an affordability gap of €34,000 for first time buyers. The working group examined potential measures and the results if certain measures were adopted:

Reduction in finance costs from 9% to 5% charges reduced by 30% 10% reduction in land prices Total reduction Cost reduction

Development levies and Irish Water connection

-€10,000

-€5,000 -€8,500 -€23,500

If these measures were to be implemented, the delivery cost achieved would be €347,500, which would effectively close the affordability gap for the average first time buyer.

Outlook for the sector Delivery of housing remains a challenging task where viability and affordability need to be equally balanced. Key areas have been identified where cost reductions could be achieved such as reduction in land costs, finance costs, and the cumulative impact on lower VAT charges as a result. It is clear, however, that there is no one solution and a number of measures are required to address an obvious viability and affordability issue. Covid-19 has also brought costs to the sector and this is not factored in the Report.

THE LAST WORD

Kevin Brady Director, Andrew P Nugent & Associates Average cost of delivering a three-bedroom semi-detached property in:

2016

€330,493

12%

2020

€371,311

Soft costs 2020: 48%

€178,902

7% Since 2016

Hard costs 2020: 52%

€192,409

19% Since 2016

Hard costs: bricks and mortar, external works and site development works.

Soft costs: professional fees, local authority contributions/development levies, land acquisition, sales and marketing, finance, developer’s margin and Value Added Tax.

Generally the increases in the delivery cost can be categorised into general labour and material inflation and compliance costs associated with regulatory changes in standards.

The report solely addresses the costs of delivering a three-bedroom semi-detached property, and does not capture costs associated with abnormal site conditions or Covid-19. The full report is available at www.scsi.ie.