Counting the real cost of delivering new homes

by | Dec 22, 2023

The Society of Chartered Surveyors Ireland (SCSI) has published its report into ‘The Real Cost of New Housing Delivery 2023’, which analysed the cost of delivering a typical three-bedroom house across 80 sites nationwide.

The report follows on from their 2020 analysis and saw an average increase in the cost of new housing delivery within the Greater Dublin area (GDA) of 24 per cent compared to mid-2020.

This includes an increase in ‘hard costs’ (defined in the report as bricks and mortar) of 27 per cent and an increase in ‘soft costs’ (defined in the report as land, levies, finance, VAT and margins) of 21 per cent.

This represents a concerning trend in the increased cost of housing delivery, which the Irish Home Builders Association (IHBA) and its members have been monitoring for some time.

In financial terms, the 24 per cent increase represented a €90,126 difference in delivery costs between 2020 to 2023 in the GDA.

The report found that most regions in the country are challenged in terms of financial viability when reviewing overall delivery costs against average national values.

This high cost is only being passed on to the end user – the homeowner.

The SCSI have outlined various recommendations to overcome these challenges, which are summarised below.

  • An extension of the development levy implemented this year by Government
  • The SCSI found that this resulted in a reduction of €17,500 in the GDA
  • A review of the First Home Scheme price ceilings (which should be adjusted in line with construction inflation)
  • Appropriate resourcing of local authorities, utilities and An Bord Pleanála
  • Engaging early with utility providers (Uisce Éireann) to avoid delays
  • Housing For All targets to be updated with accurate (Census) data
  • MMC focus
  • The implementation of the proposed new Compact Settlement Guidelines to aid viability challenges
  • Financial viability to be required within the planning process, especially where this relates to planning conditions imposed as part of grants
  • Improved design flexibility to enable Local Authorities to approve building alterations that use more cost-effective materials
  • Further stakeholder engagement on the proposed Land Value Sharing legislation to reduce negative impacts on supply
  • The implementation of E-Conveyancing
  • Dedicated staff training for public sector housing
  • The implementation of a Land Price Register
  • Counter Cyclical Investment via the Infrastructure, Climate and Nature Fund which should be used for the purpose of delivering affordable housing
  • Governmental development to adopt International Measurement Standards

The IHBA welcomes the SCSI’s report which provides an objective, accurate and up to date review of the real cost of housing delivery currently.

The report highlights concerns which have been raised by IHBA members for some time and demonstrates why schemes like the development contribution levy and Uisce Éireann rebate are necessary to aid the delivery of new homes.

We broadly support the recommendations outlined within the report and look forward to hearing the Government’s proposals to address these items.

Planning and housing supply

The CSO have published the latest planning permission approvals for Q3 2023. They show an annual increase of 43 per cent in the total number of dwelling units approved compared to the same quarter for 2022.

The breakdown between dwelling units in Q3 of this year between houses and apartments was 4,859 and 4,803 respectively.

This almost even split highlights the increase in the number of apartments that have been granted permission, representing a 105 per cent increase compared to Q2 2022.

For houses, there has been an increase in 10 per cent. The latest figures represent a positive indication of future housing supply, which is much needed given the worrying outlook reported by the CSO for Q2 2023, which saw a decrease in approvals of 23 per cent.

Whilst the high proportion of apartments which have been granted planning permission will aid supply issues for high density housing, there are ongoing viability challenges posed with the delivery of these schemes, with the cost of housing in the Greater Dublin area increasing by 24 per cent compared to 2020 as outlined in the latest SCSI report.

This will have a continued impact on the delivery of such schemes going forward.

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