Homebuilders in Ireland say the average cost of a new home could soar between €12,000 and €15,000 by the end of the year due to soaring prices for building materials, including timber, bricks, insulation and concrete.
A survey by the Irish Home Builders Association (IHBA) of its members found that rising timber prices and supply chain issues, exacerbated by Covid-19 and Brexit, have increased the cost building materials needed to build new homes.
“Due to the delays caused by the impact of the covid-19 pandemic and Brexit, we are seeing a significant increase in costs associated with building materials, coupled with a worrying shortage of products available,” said James Benson, Director of the IHBA.
“This cost increase is putting further pressure on the supply of new homes and could potentially force even more people out of the market.”
According to the IHBA survey, there has been an increase of around 4% in the price of bricks since December 2019 and an increase of around 1% in 2021. Due to Brexit, there have been significant delays on bricks from UK due to traffic jams. in customs and ports.
With the industry reopening after the latest lockdown, some suppliers predict lead times could increase from four to 15 weeks depending on the type of brick.
The cost of insulation materials has increased by 13% since December 2019 and by 12% since the start of 2021.
Timber frame prices have jumped 15% since December 2019. The IHBA said suppliers are quoting an additional 4% in Q3 2021, coupled with an additional 5% for Q4 2021. That could add another €3,000 per accommodation.
“These increased costs will have to be borne by either the buyer or the builder. Adding these costs to house prices could limit a borrower’s ability to get a mortgage,” Benson said.
“However, if these increased costs are not added to the purchase price of new homes, profit margins would be cut in half and builders would not be able to access financing to fund other homes or projects.”
Despite these recent challenges, the IHBA said the Shared Capital Program will help middle-income people buy homes and the expanded Home Buyer’s Assistance Program provides tax relief to help first-time buyers get a mortgage to buy or build a house.
“We also need to see controls on consumer credit and loans factor in rising delivery costs. With further cost increases expected due to supply shortages in the second half of the year, these initiatives are more important. than ever,” Mr. Benson said. .