Costs of SI.9 regulations are 30-50% of average deposit for a new home!

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January 21st 2014

Regulations add €20,000+ to house cost

Ireland needs to restore the link between house costs and average incomes if the housing crisis is to be resolved. Simply increasing the amount of money available to buy houses will only inflate the price without increasing the supply. The housing crisis has been the subject of much recent media coverage and some of this is outlined below.

In today’s Independent , factors affecting house prices, affordability and cost, such as the recent proposal by the Central Bank to limit the amount owners can borrow to 20% of the total purchase price of a property, are outlined by Brendan Burgess of askaboutmoney.com. Link to full article:  “New mortgage rules are a tough but necessary step to stop reckless lending

In the Independent article Burgess writes:

“Successive government policies has resulted in this unnecessarily high [building] cost. Approximately €40,000 of the sales price is directly imposed by the State in terms of VAT, social housing levies and development levies……..successive governments have introduced new building regulations without thinking of the impact they would have on building costs and consequently the supply and selling prices of new houses. It is estimated that these regulations add around €20,000 to the selling price of a house.

This € 20,000 cost of Building Regulations figure equates with between 30 and 50% of the average deposit for a new home which is politically very sensitive in view of tighter lending controls by the Central Bank.

Yesterday on “Today with Sean O’Rourke” the presenter asked his guest, Professor Ronan Lyons of TCD, if building costs are making housing projects unviable  (listen to clip here).  Lyons who has repeatedly called for a full audit of the costs of new homes replied:

“There was huge growth in house prices, 350%, from 1995 to 2007. If we had not had loose credit we would have had 180% in the same period. Now prices are half of where we were in 2007. Half of house price increases was due to credit. What we want is a housing policy – abundant affordable housing. Affordable housing is rationed credit. By 2020 we need 100,000 homes. Build more homes not create more credit.

Karl Deeter of Irish Mortgage Brokers and the Sunday Business Post, another guest on the radio programme, added that:

“affordability is the key issue. The Loan to Value ratio will not stop prices increasing. Unit numbers on the ground were not resolved. We have had boom-bust and still have a housing shortage.”

The above issues were also raised at yesterday’s Oireachtas Committee as reported in today’s Irish Times (see article Social housing provision focus of Planning Bill debate).

 

Other posts of interest

Surveyors call for examination of Building Regulation costs

Fewer than 90 social housing dwellings completed in 2014

“30 % of self-builds in 2014 have been postponed or abandoned” | IAOSB

Housing Crisis | Less than 1,000 homes completed in Dublin in 2014

10,500 housing units completed in 2014

Developer-Led projected Sales Price for a Typical House

“House building costs are 17% more than 2003 despite recession” – Bruce Shaw

Soaring house prices and rising rents could damage economy | National Competitiveness Council

 

1 thought on “Costs of SI.9 regulations are 30-50% of average deposit for a new home!

  1. phcuddy@yahoo.co.uk

    That is complete nonsense like most of the info on this forum. S.I.9 produces a quality product overseen by qualified Inspectors.

    Reply

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