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Chartered surveyors in Ireland hit out at high additional costs for new homes
The Irish government needs to address a trend in the country’s housing market which means that actual construction costs for new homes are less than half of the total price paid by buyers. A new report from the Society of Chartered Surveyors has found that the cost of building a three bedroom semi-detached house in the Greater Dublin area, for example, is over €330,000. But the actual cost of building the house, known as hard costs, came to €150,000, which at 45% is less than half of the overall cost of providing that house. This was broken down as land and acquisition costs of €57,500 or 17%, VAT of €39,000 or 12% and a margin of €38,000 or 11% as the main elements of the soft costs which total €180,000. Micheal Mahon of the SCSI said it may come as a surprise to those outside the industry to see that the actual construction costs or hard costs made up less than half of the total costs. He said this was an issue which required urgent and focused attention from Government. ‘The country is experiencing a chronic housing shortage which is contributing significantly to the current homelessness crisis. The findings of this report highlight a number of pressing issues, particularly on the soft cost side. We need to kick start housing supply as soon as possible and to accelerate from the current output of 12,000 units per annum to the 25,000 units which is required,’ he pointed out. The report is based on a detailed study of eight house building projects with a minimum of 30 units in the Greater Dublin area where chartered quantity surveyors were employed as independent cost consultants. It shows that the cost of building a new house in Dublin is now €45,000 more than the median asking price of a three bed semi-detached house in the city according to a recent MyHome.ie/Davy property report. The study found that the cost of building the house from foundations to roof and completing the estate roads and drains etc is €150,000. In addition to the soft costs listed above there were levies of €12,000 or 4%, some €5,500 or 2% for professional fees and sales and marketing costs of €8,000 or 3% to bring total soft costs to €180,000. The report provides an analysis of a number of cost reduction options. Mahon said it is up to policy makers to decide which measures to implement to support the early delivery of supply. ‘Whether they opt to reduce VAT to 9% or to zero as is the situation in Northern Ireland or to reduce finance costs to 5% or to reduce levies to €1,500 or to increase the supply of land, prompt and decisive action is needed. They may well opt for a combination of these measures. However the focus should… Continue reading
US homes values growing faster than expected, latest data shows
Home values in the United States are appreciating faster than experts expected, rising almost 5% over the past year, according to the latest index report. The April real estate market report from Zillow also shows that there are 3.4% fewer homes for sale than there were 12 months ago and home values are currently appreciating at 4.9%, almost 3% faster than Zillow predicted a year ago. The real estate report suggest that a smaller number of homes on the market will make it harder for first time buyers. The number of entry level homes for sale is down almost 8% over the past 12 months. Stiff competition and high demand, in addition to low inventory, stronger wage growth and low mortgage rates, are driving up home prices across the country, especially for entry level homes, which is forcing many aspiring home owners into bidding wars. Markets with the tightest inventory have some of the fastest rising home values. Over the past two years Portland has seen an almost 405 decrease in the number of homes for sale, with home values up 15% over the past 12 months. Similar patterns hold true in hot markets like Dallas, Seattle, and Denver, where inventory is down more than 20% and home value growth is in the double digits. In addition to low inventory, home values are rising in response to a strong job market, higher than expected wage growth and persistently low mortgage rates, the report also points out. Those looking to purchase a home will find more homes to choose from in the condo and luxury markets. Inventory is improving in these two markets due to high end construction, with the number of homes for sale close to hitting positive growth. Buyers searching for a single family home, or in the bottom or middle of the market, will have less to choose from. ‘New construction has been sluggish over the past year. We're building about half as many homes as we should be in a normal market. There still aren't enough homes on the market to keep up with the high demand from every type of home buyer,’ said Zillow chief economist Svenja Gudell. ‘In many markets, those looking to buy a home in the bottom or middle of the market will need to be prepared for bidding wars and homes selling for over the asking price. This summer's selling season's borders will most likely be blurred again as many buyers are left without homes and will need to keep searching,’ she explained. Homes in the top third of the housing market have more frequent price cuts than homes in the bottom and middle of the market and some 16% of top tier homes had a price cut over the past year compared to 11% of bottom tier homes and 13% of middle tier properties. Almost 125 of condos had a price cut over the past year, driven by more availability in the luxury condo… Continue reading
New research reveals lack of affordable homes in London
With the average price for a property in London now exceeding £500,000 new research shows that just 46% of home listed matches this price or less. The analysis from fixed fee estate agent eMoov examined current stock levels across all of the major portals, recording the total levels listed for each London borough, before comparing this to the level of stock listed for £550,000 or less. The research then took the total stock under £550,000 and recorded it as a percentage of the total level of stock across the capital. The worst location for affordability was Kensington and Chelsea with just 6% of properties for sale at £550,000 or less, followed by Westminster at 7%, Hammersmith and Fulham at 14%, Camden also at 14%, Wandsworth at 22% and Islington at 25%. A further 13 of London’s boroughs had just 50% or less of its stock listed for the average price of £550,000 or under. The boroughs that did offer more for those with a budget of half a million were Hounslow at 57%, Bromley at 61%, Waltham Forest at 64%, Enfield at 65%, Hillingdon at 65%, Lewisham at 66%, Redbridge at 72%, Greenwich at 72%, Newham at 78%, Croydon and Sutton both at 79%, Havering at 84%, Bexley at 91% and Barking and Dagenham at 97%. ‘It’s no surprise to anyone that the majority of London is unobtainable to many from a property point of view. However, this research highlights just how out of reach the capital actually is for UK home buyers, even for those with the sizable budget of £550,000,’ said eMoov chief executive officer Russell Quirk. ‘For many the average house price is a benchmark, a mile stone, on just what they need to have in the bank to live in a certain area. But this average price masks the true cost of living in the capital or even where in the capital you can live for that matter,’ he pointed out. ‘When you consider that even with that sort of healthy budget, you would have to restrict your property search by removing more than half of the properties currently for sale in the capital, it really highlights how little £550,000 can get you in the London market,’ he added. Continue reading
