A NEW report has claimed that Dublin is the second most expensive city in Europe in which to build apartments.
The Building Homes report, from Trinity College Dublin and the Society of Chartered Surveyors Ireland, said of 10 cities surveyed, only Zurich was more expensive than the Irish capital.
Meanwhile, Belfast came in as the second cheapest city in which to build apartment blocks.
One of the report's authors said the findings highlight the challenge of high construction costs in Dublin, particularly as a barrier to new housing supply.
Irish capital more expensive than British trio
To compile the report, the authors looked at the cost per square metre of building a block of 39 apartments over seven storeys, most of which were two-bedroom apartments.
It looked at both 'hard' costs, such as earthworks, equipment and services, and some 'soft' costs, including preliminaries, risk and taxes.
At a cost of €2,866 per sqm, Zurich was the most expensive, at a level of cost notably above the other cities.
Following Zurich were a group of five cities (Dublin, Manchester, Stockholm. Glasgow and Birmingham) whose costs were close to but slightly above the average cost of the 10 cities surveyed.
In this group, Dublin was the most expensive at €2,363 per sqm with Birmingham the cheapest at €2,079 per sqm.
The last grouping of four cities had costs below the average and included Amsterdam, Belfast, Brussels and Tallinn.
The Dutch city cost €1,823 per sqm while the Estonian capital was the cheapest overall at €1,367 per sqm.
Although Belfast was the second cheapest overall at €1,755 per sqm, there was a significant gap between it and Tallinn.
'Dublin is an expensive place to build housing'
Ronan Lyons, Associate Professor of Economics in Trinity College Dublin, said the cost to build in the city has affected the ability to meet the demand for homes.
"For some time, we have known that Dublin is an expensive place to build housing, with costs per square metre high compared to peer location," he said.
"This is something that has affected the ability of the housing system here to build the volume of homes needed.
"This report is the first to break down that high-level figure into the different components that go into building a home.
"Dublin is somewhat cheaper than the typical city for structural works, typically involving concrete.
"However, Dublin's high overall cost is due in particular to two headings – services and equipment, which includes heating, power elevators and non-structural works, which covers things like floors, windows and carpentry."
Labour plays 'significant role' in costs
Addressing the disparity between Dublin and Belfast, Prof. Lyons admitted more research had to be done but identified labour costs as a bigger factor than materials.
"Across all cities, the analysis indicates that the price of materials varies far less than more labour-intensive inputs," he said.
"This means that the cost and productivity of labour in construction plays a significant role in driving overall differences in construction costs.
"Supply chain considerations appear to be less important, with for example, Belfast — located just over 140km from Dublin — one of the cheapest locations among the 10 surveyed.
"Further analysis is required to explore why many other building elements are more costly in Dublin compared to Belfast.
"In particular, in addition to the role of labour productivity, policymakers need to understand the role played by regulatory specifications."
You can read the full report by clicking here.
