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BUILDERS NEED OVER €330,000 to construct a single house in the greater Dublin area, according to a major new study.
The report by the Society of Chartered Surveyors Ireland (SCSI) also found that the price of building the physical structure of the house came to just over €150,000, less than half of the overall cost of providing that house.
It evaluated the cost of building a three-bed, semi-detached house of 1,214sq ft, which is around the average size of new properties in Dublin.
According to the latest report from MyHome.ie, in the first quarter of the year the median asking price for a three-bed house across the Dublin county area was €285,000.
The SCSI argued that the gap between house prices and construction costs needs to be cut. Separate figures from Daft.ie showed the number of properties for sale across Ireland hit a nine-year low earlier this year.
The society recommended several different measures to reduce the cost of manufacturing, including cutting VAT in the building sector from 13.5% to 9% and setting up a state-backed lender to make lending to the construction industry cheaper.
Costs
For the report the SCSI took a poll of costs at eight different housing projects, each with a minimum of 30 units currently under construction, in the greater Dublin area during late 2015 and early 2016.
It found that construction costs averaged around €150,000 per house, while other ‘soft’ charges made up the €180,000 difference. The largest of these was the price of buying land, which the SCSI calculated cost an average of €57,500 per unit.
VAT represented 12% of the total cost while developers also needed to leave a margin of 11% in order to get their project off the ground. Borrowing, marketing, levies and professional fees made up the rest of the costs.
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Speaking to Fora, Norman Higgins, a member of the SCSI and the commercial director of construction group Sisk, said the figure of €330,000 represented what a developer would need per house to start a project from scratch – without the benefit of existing resources such as land.
The projects surveyed had an average margin of just under €38,000 or 11% per house, which means that the basic cost per unit was just over €292,500 before any profit is accounted for. The margin was needed to cover elements like a risk allowance for the project, and also to give the developer enough money to fund their next venture.
Margin
However, the SCSI added that most financiers are currently demanding a margin of at least 15%.
The organisation said that this was due to several factors including getting a better return on their equity, the potential for unforeseen issues to arise during building and the general risk of the construction industry.
“Before any financial institution will fund them, they need to demonstrate that they would be making in the region of 15%,” Higgins said.
For a developer’s business to go forward (after one project), he still needs to buy his next site and it doesn’t stack up.
He said the surveyed sites had extenuating circumstances in “every single case”, which helped the developers to boost their margin and would not be available to new entrants into the market.
“For some of them, the development levy may have been paid when they bought (the site),” he said. “They may not have had to finance it or they may have had cash themselves.”
Cost of finance was also found to be very high, with the SCSI claiming many developers were paying rates of 10% to get funded.
Proposals
The organisation recommended introducing a blend of measures to cut the cost of new builds and get construction moving.
Two of the most eye-catching proposals were to cut VAT and reduce finance costs.
The SCSI said that policy makers should consider reducing VAT to 9%, adding “consideration should also be given to the zero rate applied (to new builds) in Northern Ireland and the UK”.
The organisation also said that state finance may be the “most feasible”way to reduce the cost of getting money for developers by establishing a development bank that could lend money at 5% rates thanks to the government’s ability to borrow at negligible costs.
It said that this bank could be modelled on something like the old Agricultural Credit Corporation which was set up by the government to provide lending to the agriculture sector and was sold to Rabobank in 2002.
Written by Paul O’Donoghue and originally published on Fora a new business publication for Irish startups and SMEs.
I’ll correct the headline ” Eir to add 200,000 disappointed and frustrated customers”
@Fergus Murphy: 2.3MBS measured this morning on my Eir internet line. I live in a town and don’t have fibre. I called them recently to find out when high speed internet will be available. The guy on the phone told me to contact my local TD as it would speed things up.
One useless waster advising me to contact another useless waster.
@Fergus Murphy: for sure, unless 1.2 or less usually is acceptable.
@David Corrigan: actually, my estate had a fibre cabinet installed and sat there for 6 months which hadn’t gone live. Emailed all my local representatives, and within 2 weeks it had gone live. You’d be surprised how effective a well worded email is.
@David Corrigan: try get Starlink. I got it in a few weeks ago. Getting up to 300mbps.
@neuromancer: well-worded
@Fergus Murphy: So true Their customer service is appalling.
@David Corrigan: The Eir guy may have a point! In the town I live in, one estate suddenly received Fibre To The Home from Eir earlier this year (and the rest of the town are still waiting and will be for a while). It turns out it was because a TD lives in it and that TD reached out to Eir and, voila!
@P.S. I Hate You: you must work for starlink. €500 for hardware and €61 shipping. Then €100 a month subscription. To sign up today I have to pay €561.
As per starlink’s own website “During beta, users can expect to see data speeds vary from 50Mb/s to 150Mb/s”
So where are you getting 300mps?, starink is satellite broadband which doesn’t come down at 300mps, if it did the starlink website would most definitely say it.
@Fergus Murphy: wouldn’t touch them EVER again – not even with a barge pole……
@Paul Quirke: Glad you pointed that out, now everyone can rest tonight.
@Mark Dit: is he telling porkies??
@Mark Dit: im getting over 300mbps on occassion never goes below 100mbps. I got it cause it’s my only option. I use ookla for my speed tests. better to under promise and over deliver. I’m happy with my service that’s the main thing.
@Mark Dit: here is a copy of my speed results.
https://us.v-cdn.net/6034073/uploads/2EG4HX2P3O13/screenshot-20210716-230722-speedtest.jpg
Still wouldn’t go near them in a million years after the horror stories iv heard about their customer service.
@Chris Forde: To be fair its not a bad service problems arise when you have to contact them for any issues
@Chris Forde: and all true.
@Chris Forde: yes their customer service was abysmal could be an hour on hold. They seemed to have overhauled it in last couple of months after complaints in Dail. Recently onto them, through to someone within 5 minutes.
Avoid Eir at all costs.
They need to invest in their existing products and customer service department. Absolute shambles. I’ll never deal with them again after my previous experiences.
Ours is still painfully slow and we are 5 miles from O’Connell St. No fibre here.
Great free advertising for Eir. Just don’t get a mobile phone on that network.
@Shane McGrath: why not Shane ? I’m with them a number of years and I’ve been many places around Ireland and had very few coverage black spots I’ve had people with other networks and they’ve had issues. And if I’m a place that has bad coverage but has wifi I can use wifi calling. I’d bet this article was about other service providers people on here would still be moaning. IT’s because Eir made mistakes they’ve rectified some of them like the customer service depart very little waiting now but other issues still exist.
@Shane McGrath: What they did to Meteor’s service is criminal.
You must not use your mobile often or have not needed customer service.
@Contrary Mary: get if the train in Dublin 5 abs signal drops to one bar, if people call you they get voicemail. Was with them for two weeks. Horrendous.
@Contrary Mary: sorry Mary just getting back to you now I was on the phone. But yes I’m on the phone a lot every day in various locations and a lot of the time I have 4G coverage and yes I was onto customer service last week to renew my broadband/mobile contract and only waited less than 5 mins to be connected. Years ago I was with VF mobile only that was shocking 1 bar 3G at home go 1km up the road very little coverage and I’m in Wexford town plus I was paying a scaldy bill too. I’m also fully aware of how networks operate in terms of coverage and I know all the cell towers around me.
@: you 100 percent are sitting in an eir office. I don’t think anyone believes that
@Mark Dit: I’m definitely not sat in an Eir office but I am sat in my office editing photos as per my profession and just tested my broadband speed 454.2 download 33.3 upload and full 2 bars of 4G indoors closest mast to me is 3km in an industrial park. So I’ve no issues never have.
Only a matter of a quick phone call to them and they’ll sort it. Sure sure sure!!!!
@Paul Bracken: Took me 3 phone calls to cancel a service I never received. Swear to god the 3rd phone call to them I was in Cyprus standing on my hotel balcony and according to the guy on the phone I was lying. Eirs installation team are at my address as we spoke and they had me sign there tablet to confirm delivery and installation of the router he can see this on there “live” so I can’t cancel as I’m obviously happy with the service. It took a trip to the hotel reception and a chat with the receptionist for the eir customer service team to accept I was infact in Cyprus. Absolute joke of a company.
@Roy Dowling: a55hole company
The fibre/broadband network is so poor. Parents live in north cork near a big town and the broadband fails every second day because the line in damaged. Eir did nothing despite multiple complaints over 2 years. They’re now using 4g for the house.
@Ed Quinlan: try Starlink
@P.S. I Hate You: you must work for starlink. €500 for hardware and €61 shipping. Then €100 a month subscription. To sign up today I have to pay €561.
As per starlink’s own website “During beta, users can expect to see data speeds vary from 50Mb/s to 150Mb/s”
So where are you getting 300mps?, starink is satellite broadband which doesn’t come down at 300mps, if it did the starlink website would most definitely say it and not 150mps
@Mark Dit: Starlink is a game changer, got mine nearly 2 weeks ago, DL speed of 275 MBs. Fed up of switching providers only to be let down time and again.
@Will Bourke: spot on mate. Worth noting the pricing will come down and speeds will increase when the beta phase is completed.
@Ed Quinlan: I have no probs with Eir at all and have my phone tv and broadband package.
Seems a reasonable deal as all works well.
Just wish I could get fibre as my speeds vary between 38 and 42mb.
Ironically, the Google API Key for the map on their fibrerollout.ie website has been expired for over a week now, so the maps won’t load – maybe they should call someone who knows IT?
They can’t manage what they have ffs.
Still trying to charge me for stuff a canceled a year ago
@Lets be real: Same hear despite a half a dozen phone calls and a Twitter conversation that assured me my old account was closed.
@Lets be real: same here
A business friend what’s just started up his own VR gaming business, asked Eir to supply broadband. “No problem. We can be with you in possibly two months.”
Friend said “No Thanks.”. He then rang “Three” …They set him up in THREE days with 600mb per sec’ broadband for his business. #EnoughSaid.
@Jeff Rudd: 3 are just another a55hole company to avoid….
@Shane McGrath: Possibly. Credit where due, they were far easier to accommodate a new business.
Rang Eir twice last month about adding fibre broadband. Both operators didn’t know. One system saying they could another system saying they couldn’t. Promised they would get back to me with a definite. I won’t give anybody any guesses as to whether they did or not
Live in Drogheda. The nation’s official biggest town. No service here on one complete side and absolutely dire service on the other. Asked Eir when it’s possible to avail of a decent updated service. The reply was “Maybe next year – if you are lucky!”.
@Jeff Rudd: Cheek of them
I’m getting 1.9mb yet Eir ring and try to sell me some high speed offer that’s not available. Pure false advertising and misleading customers is all there good at. I doubt other providers are any different
They cant look after theircexisting customers…. Customer Service .. zero
Had an Eir repair guy out recently after god alone knows how many phonecalls, told me not to bother renewing my contract with them as they’re absolutely useless, so I going to heed his advice, thanks Eir.
Has the ‘Air’ (pun ntended) of setting themselves up for another sale. Build up the connections on the books to inflate the value of the company.
I doubt there is another company in Ireland that has been pillaged as much as them through since privatisation.
I cant write what I would like too about them suffice to say they have cherry picked all the good locations and left the hard stuff to the public purse to pay for. In time honoured tradition this contract to complete the network had being given to a mate who has no experience in broadband networks. Enough said or the Journal wont print this.
On the one hand this is good news because I’m on gigabit with virgin media and they are the only provider who service my estate with those speeds and competition is a good thing. On the other hand its Eir and I’ve heard too many horror stories to give them any serious consideration.
Still, at least now I might be able to threaten to leave virgin when my contract is up for renewal. So, yay I guess?
@Ribeard Ó Fiachna:
I wouldn’t believe a word EIR say.
When there were discussions regarding the National Broadband tender being awarded all of a sudden they could supply a service despite them pulling out of the tendering process previously. They have been owned by so many owners that have only been interested in making a quick buck and no doubt the current owners are trying to do the same.
We have all the products and have only had a problem once, cable fault outside not bad for 20 years. 1901 was problematic however.
Will never get here in my lifetime…
Guys, don’t forget that it’s only Eircom wearing a different T-shirt. Just as b ad, just as un reliable, just as use less as ever. Does a leopard ever really change its spots. Eir, Let’s make possible … Line Up Suckers …..
@Michael Fitzpatrick: and where else can you get fibre from outside of siro which has much less coverage.
I’m waiting 7 weeks for my connection and still no confirmation of date
Have eir gigabit and its excellent apart from the appealing customer service. Can’t fault their loyalty team tho, if you are a long term customer, they treat you well. Eir often gets a negative image from non fibre customers ( was once part of the gang) but their fibre extreme offering is excellent for advanced users
@Dawid Grzybowski: unfortunately not available everywhere or i would switch today. Ince it’s up and running no customer service contact needed
I moved from Eir to Virgin 15 or 20 years ago due to their abysmally bad customer care, slow speeds, high prices and ‘couldn’t care less’ attitude. It would take a lot for me to move back
Wish they would connect the older apartment buildings built like 20 years ago so that there is a cheaper alternative to virgin. Even that other service which uses the ESB network is cheaper but they won’t go into areas where there is already a fast connection(cable).
do my house pleeeeeeeeeease
Signed up with Eurona Arden here in Galway… 500mb speeds and a low price. Rural location. Cousin signed up in Monaghan too last week
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