Manufacturing & Supply Chain

A survey carried out by the Irish Home Builders Association (IHBA) of its membership has found that increased timber prices and supply chain issues, exacerbated by Covid-19 and Brexit, have increased the cost of building materials required for the construction of new homes.

Speaking about the survey James Benson, Director IHBA, said: “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. 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 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.”

“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. We also need to see the controls on consumer credit & lending take account of the increasing cost of delivery. With further cost increases expected due to supply shortages in the second half of the year these initiatives are more important than ever.”

Key findings

• Average 3 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 price of 4% in bricks since December 2019 and increase of approximately 1% in 2021. Due to brexit there has been large delays on bricks coming from the UK with to congestions in customs and ports. With industry reopening after latest lockdown some suppliers are predicting lead times could increase to 4-15 weeks depending on brick type.
• Concrete – Approximate increase of 4% since December 2019 and 1% in 2021 so far.
• Insulation – approximated 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.