Thursday 29 June 2017

Cost of building houses worsening crisis - CIF

Hubert Fitzpatrick, CIF; Ronan Lyons, economist with Daft.ie; Hugh O’Neill, chairman of the Irish Homebuilders Association; and Marian Finnegan, chief economist, Sherry Fitzgerald, at the event
Hubert Fitzpatrick, CIF; Ronan Lyons, economist with Daft.ie; Hugh O’Neill, chairman of the Irish Homebuilders Association; and Marian Finnegan, chief economist, Sherry Fitzgerald, at the event
Peter Flanagan

Peter Flanagan

Government charges and levies make up more than a third of the cost of a new home, and that figure must fall to make home construction viable, the leading builders lobby group has said.

The Construction Industry Federation (CIF) claimed levies as well as Vat and connections to utilities now make up as much as 34pc of the cost of building houses. That has helped to make new construction unviable in many parts of the country outside Dublin.

Speaking at a CIF event in Dublin yesterday, Micheal Mahon of the Society of Chartered Surveyors said that his research showed a three-bedroom family home cost about €318,000 to build including a 15pc profit margin. That places those homes well above the estimated limit for most first-time buyers of €280,000 to €300,000.

The industry has been calling for Vat on new homes to be cut from 13.5pc to 9pc and Taoisaeach Enda Kenny is known to be in favour of such a move. The Department of Finance however has shot down that plan repeatedly.

CIF director Hubert Fitzpatrick said the shortage of new homes had long passed crisis point. "Due to the cost of construction, many Irish homebuilders are finding residential development unviable.

"In many parts of the country, the cost of construction is so high relative to asking prices of existing houses they would be building at a loss. As a result, housebuilding activity outside the greater Dublin Area is stalled," he said.

Sherry Fitzgerald's head of research, Marian Finnegan, echoed those words.

Last week Sherry Fitzgerald warned the supply of homes for sale on the open market was at a 10-year low in Dublin and that was due in part to the lack of new builds.

"House prices in Dublin are either flat or almost flat. Considering where we are in the cycle and the fact that most of the economic activity goes through Dublin, this is a strong indicator that the market is not functioning," she claimed.

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