Cost of new apartment is now 'out of reach' of most working couples as 30pc of final sale price goes to the State
A landmark new study has found the cost of new apartments is now beyond the reach of most low-middle income Irish workers, with a startling 30pc of the final sale price going directly to the State in taxes and fees.
The study, conducted by EY-DKM Economic Advisory, found the 'hard' or physical cost of an apartment is just 48pc to 56pc of the overall construction total.
Such property prices, the report warned, mean rents have to be set at a level which is totally unsustainable for most workers.
Worse still, it bluntly warned the increasing inability of workers to access affordable apartments to either buy or rent is threatening Ireland's future economic growth.
Commissioned by Cork Chamber of Commerce and the Construction Industry Federation (CIF), the report makes stark reading in terms of the ongoing housing crisis.
It highlighted alarming issues over the cost and affordability of apartments.
A staggering 97pc of all apartments built in Cork were developed before 2010.
The study was conducted across four new apartment schemes in Cork.
It found that the total delivery cost of a new apartment drives a sales price far above what a first-time buyer working couple can afford.
"The projected sales price of a new two-bed apartment in Cork city ranges from €389,000 to €486,000, meaning that a first-time buyer would need an income of between €100,000 and €125,000 to afford such a home in Cork city, the Docklands or suburbs," it warned.
Build-to-rent apartments suffer from similar price-related problems. The average monthly rent would need to be €2,500 for a two-bedroom apartment in Cork city and €3,000 for a three-bed apartment to ensure viability - far beyond the reach of most low-middle income workers.
Cork Chamber of Commerce chief executive Conor Healy said: "As Ireland's fastest growing city, Cork needs 27,300 new housing units by 2031 to meet growth targets.
"However, new homes have to be affordable."
Major Irish employers have already warned that they may now have to focus expansion overseas because of the difficulty in accessing affordable housing for workers in cities.
CIF official Conor O'Connell added: "The current cost of delivery means that it is not possible to construct affordable new city centre apartments for the average renter or buyer.
"Unless the total cost of apartment delivery comes down, new apartments will remain unviable."
The CIF official stressed that one-third of the final price of a new apartment goes to the State and is entirely outside the control of developers.