Building Materials Cost Rising Is Getting Worse By The Week, TDs Should Be Told

INCREASING COSTS OF BUILDING MATERIALS are putting houses “increasingly out of reach” for the people who need them, the Irish Home Builders Association (IHBA) will tell TDs later today.

In his opening statement before the Oireachtas Joint Committee on Housing, Heritage and Local Government, IHBA Director James Benson will tell TDs and Senators that recent increases in material costs are not helping with affordability of the house.

“Affordability remains a challenge and the recent extraordinary increases in costs and material availability are not helping. Supply does not meet demand,” Benson will tell politicians.

“With rising construction costs, homebuilders are challenged to bring new homes to the market at a level that people with average incomes can afford.

“Residential material costs are rising daily, putting homes further out of reach for those who desperately need them.”

Benson will say that the situation is getting worse by the week and that if this higher delivery cost is not added to the purchase price of a home, pre-tax profit margins fall and builders will not meet the criteria to finance the development.

He will add that when this price is added to the purchase price of a home, it diminishes a consumer’s ability to obtain a mortgage and “those who are currently ‘locked out’ of the market are further restricted.”

The group will also tell DTs and Senators that half of the cost of bringing a new home to market is made up of so-called ‘soft costs’, which include VAT, taxes, land costs and professional fees.

“These costs are often incurred for years before the start. There is potential to streamline those costs, deliver homes sooner, reduce costs and make homes more affordable,” Benson will say.

“There is a difference between construction costs and development costs, and asking the new homebuyer to pay for all these soft costs is unfair compared to the existing housing market.”

The Society of Chartered Surveyors of Ireland (SCSI) is also ready to tell the Joint Committee that rising construction costs are due to both current levels of inflation and volatility in building material prices.

Earlier this month it was announced that the Government would pay up to 70% of inflation-related costs on state projects, with Chancellor of the Exchequer Michael McGrath saying this was due to the threat that the projects would not be they will complete

According to the SCSI, these are particularly insulation, cement, plasterboard, metals, and fuel, along with labor shortages and high demand for housing projects.

“Regarding the first half of 2022, it is clear that Russia’s invasion of Ukraine is having an impact on the price of materials previously sourced from the region, especially steel and base metals, while also has caused a dramatic increase in fuel and energy costs. ” the SCSI will tell the TD.

While SCSI will say there is no single solution to rising costs, it will require a “proactive and cohesive” response from government, while suggesting that local authorities be resourced to enable faster processing times.

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labor shortage

The IHBA is also prepared to raise concerns about labor shortages in the construction industry, saying an additional 27,000 workers are needed within the residential construction industry to meet the Government’s targets.

“While we are already seeing increased numbers of people entering the sector across the various professions and trades, we must continue to make the sector attractive to new entrants and remove current roadblocks,” Benson will say.

“Work permits for those coming from outside the EU are currently taking 16 weeks, this is too long to expect someone to wait when we urgently need workers,” adding that additional resources will be deployed within the Enterprise Department.

The IHBA will also apply for an enhanced business internship model that would range from six to 18 months, depending on the type of job.

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