The cost of materials could add €15k to the average new build by the end of 2021
Covid and Brexit are wreaking havoc on the construction industry.
Fresh from a series of lockdowns and delays throughout the past 12 months, now builders are facing a new problem; increased timber prices and supply chain issues have increased the cost of building materials required for the construction of new homes by up to €15,000 per three-bed semi.
A survey carried out by the Irish Home Builders Association (IHBA) has found that the price of bricks has risen by four percent since December 2019 and a further one percent in 2021, while insulation prices increased by 13% since December 2019 and a further 12% since the start of 2021.
“Due to delays caused by the impact of both the Covid-19 pandemic and Brexit we are seeing a significant increase in the costs associated with building materials coupled with a worrying shortage of available product.” said James Benson, Director IHBA.
“This cost increase is putting further pressure on the supply of new homes and could potentially lock even more people out of the market.”
These are the key findings from the IHBA survey:
- The average three-bed semi (95sq/m) home could see a product inflation range of between €12,000-15,000 by end of 2021.
- Bricks: There has been an approximate increase in the price of 4% in bricks since December 2019 and an increase of approximately 1% in 2021. Due to Brexit there have been large delays on bricks coming from the UK due to congestion in customs and ports. Lead times could increase to 4-15 weeks depending on the brick type.
- Concrete: Approximate increase of 4% since December 2019 and 1% in 2021 so far.
- Insulation: Approximate increase of 13% since December 2019 and 12% since the start of 2021.
- Plywood: Approximate increase of 12% since December 2019 and 11-12% in 2021.
- Shipping / Transport: Approximate increases of 32% since December 2019.
- Softwood: An Approximate increase of 31% since December 2019.
- Steel: Approximate increases of 15% since December 2019.
- Timber Frame: Approximate increases of 15% since December 2019. Suppliers quote a further 4% coming in Q3 2021 coupled with an additional 5% for Q4 2021. This could add an additional €3k per housing unit.
“These increased costs will have to be taken on by either the buyer or the builder. Adding these costs to house prices could limit a borrower’s ability to secure a mortgage. However, if these increased costs are not added to the purchase price on new homes profit margins would be halved and builders prevented from qualifying for finance to fund further houses or projects.”
Further cost increases are in the second half of the year due to supply shortages.
“Despite these recent challenges there are things that can be done to help those looking to purchase a home – the shared equity scheme will help middle-income earners buy homes and the extension of the Help to Buy scheme offers tax relief to help first-time buyers secure a mortgage to buy or build a house,” said Benson.
“We also need to see the controls on consumer credit and lending take account of the increasing cost of delivery.”