Post new topic Reply to topic  [ 19 posts ]  Go to page 1, 2  Next
Author Message
 Post subject: IT Opinion: No concrete data behind race to build new homes
PostPosted: Mon Apr 21, 2014 10:50 pm 
Offline
Property Magnate

Joined: Feb 27, 2013
Posts: 542
There's an interesting comment posted under an Irish Times opinion piece by John McManus that, if true, would help me understand why builders aren't building and why we are not in a bubble. My question is... is this true? The comment is
Quote:
John, There is concrete evidence . It's a simple mathematics for example , Currently the cost of house in Terenure is selling at around E300 to E350 sq foot. Thats a fair price is it not ? If you were to examine the replacement cost that is ( labour , Materials , planning + 20 % Professional Fees + Cost of site you would be looking at E400 + per sq foot to replace it ) April 20th , Terenure quality houses are selling E50 to E100 per sq ft below there replacement cost, if demand continues to deplete inventory prices will go up another 20 % this year . Building will resume because it will be profitable . This is not a bubble either it's a real market, with a lot of all cash buyers or 30 to 50 % down payment buyers , it not being fuelled by dummy credit merchants


The article is http://www.irishtimes.com/business/sectors/commercial-property/opinion-no-concrete-data-behind-race-to-build-new-homes-1.1768238


Top
 Profile  
 
 Post subject: Re: IT Opinion: No concrete data behind race to build new ho
PostPosted: Tue Apr 22, 2014 12:40 am 
Offline
Under CAB Investigation
User avatar

Joined: Oct 20, 2010
Posts: 2099
Surely you could have used the same argument to 'prove' that we didn't have a bubble at any given point during the Celtic Tiger years too. If you include current site cost of course you can make an argument that properties are selling for at or under replacement costs but the bubble premium is built into the notional site cost so the whole argument is circular and meaningless.

_________________
banana republic, septic isle


Top
 Profile  
 
 Post subject: Re: IT Opinion: No concrete data behind race to build new ho
PostPosted: Tue Apr 22, 2014 4:45 am 
Offline
Planning Tribunal Attendee
User avatar

Joined: Jul 4, 2012
Posts: 1363
Wow.....
what a truely awful lot of nonsense in the IT these days
It is al based on the presumption that the government want to see affordable prices for housing at present or at any point in the future.

_________________
A housing boom is the economic equivalent of a tapeworm infection Tim Harford

"Those who yearn for the end of capitalism should pray for government by men who believe that all positive action is inimical to what they call thoughtfully the fundamental principles of free enterprise." - JK Galbraith


Top
 Profile  
 
 Post subject: Re: IT Opinion: No concrete data behind race to build new ho
PostPosted: Tue Apr 22, 2014 6:27 am 
Offline
Too Big to Fail

Joined: Aug 23, 2008
Posts: 3190
Location: Bogtrotterland!
hiphop wrote:
There's an interesting comment posted under an Irish Times opinion piece by John McManus that, if true, would help me understand why builders aren't building and why we are not in a bubble. My question is... is this true? The comment is
Quote:
John, There is concrete evidence . It's a simple mathematics for example , Currently the cost of house in Terenure is selling at around E300 to E350 sq foot. Thats a fair price is it not ? If you were to examine the replacement cost that is ( labour , Materials , planning + 20 % Professional Fees + Cost of site you would be looking at E400 + per sq foot to replace it ) April 20th , Terenure quality houses are selling E50 to E100 per sq ft below there replacement cost, if demand continues to deplete inventory prices will go up another 20 % this year . Building will resume because it will be profitable . This is not a bubble either it's a real market, with a lot of all cash buyers or 30 to 50 % down payment buyers , it not being fuelled by dummy credit merchants


The article is http://www.irishtimes.com/business/sectors/commercial-property/opinion-no-concrete-data-behind-race-to-build-new-homes-1.1768238

Replacement costs don't include the cost of the site, assuming it's for insurance purposes as you already own it!
Anyone who snapped up sites at the bottom could make a good profit now it they built, but I expect they're waiting for the market to rise further first.

_________________
"Democracy is like sausage, you want it, but you don't want to know how it is made". [John Godfrey Saxe]
Ronald Coase, Nobel Economic Sciences, said in 1991 “If we torture the data long enough, it will confess.”
"Give me control of a nation's money and I care not who makes it's laws" — Mayer Amschel Bauer Rothschild


Top
 Profile  
 
 Post subject: Re: IT Opinion: No concrete data behind race to build new ho
PostPosted: Tue Apr 22, 2014 7:44 am 
Offline
Under CAB Investigation

Joined: Jun 26, 2012
Posts: 2832
Location: The Second Æther! Hull Breach Imminent, Eschaton Immanent...
Where do those replacement costs come from (apart from a comment on IT website). I thought to google, and came up with this:
http://www.scsi.ie/about_us/rebuildcalculator
Which gives far lower rates (e.g. 120m2 4 bed detached in dublin at €213k).


Top
 Profile  
 
 Post subject: Re: IT Opinion: No concrete data behind race to build new ho
PostPosted: Tue Apr 22, 2014 7:50 am 
Offline
Too Big to Fail

Joined: Sep 13, 2012
Posts: 4354
JohnnyTheFox wrote:
Surely you could have used the same argument to 'prove' that we didn't have a bubble at any given point during the Celtic Tiger years too. If you include current site cost of course you can make an argument that properties are selling for at or under replacement costs but the bubble premium is built into the notional site cost so the whole argument is circular and meaningless.

Exactly. The price of residential land is driven by what people will pay for houses on it, not the other way round.

It does raise some interesting questions about what people will pay more for stuff built to current regs, whether the extra architects fees will actually produce measurable improvements in build quality, and whether the additional supervisory effort on new builds is a simple net plus or will generate savings elsewhere.

I remember some interesting conversations with the foreman on my tiger built house about whether head-sized holes in the walls were acceptable at "snagging" stage. :roll:

I'd certainly pay substantially more for a 2014 house than a 2004 house, all other things being equal. New building in any quantity has to depress prices (relatively) of old, fugly, cold houses with no "period" appeal, although the tradeoff always seems to be site size. There's a fixed amount of money to be scattered around the housing market so rises in one part (new builds) ought to constrain prices of other stock.

Is there a similar stand off between landowners and builders as there is a perceived stand-off between owners and buyers?

_________________
"It's easy to confuse what is with what ought to be, especially when what is has worked out in your favour"
Tyrion Lannister


Top
 Profile  
 
 Post subject: Re: IT Opinion: No concrete data behind race to build new ho
PostPosted: Tue Apr 22, 2014 11:05 am 
Offline
Homeless

Joined: Nov 24, 2013
Posts: 9
hiphop wrote:
There's an interesting comment posted under an Irish Times opinion piece by John McManus that, if true, would help me understand why builders aren't building and why we are not in a bubble. My question is... is this true? The comment is
Quote:
John, There is concrete evidence . It's a simple mathematics for example , Currently the cost of house in Terenure is selling at around E300 to E350 sq foot. Thats a fair price is it not ? If you were to examine the replacement cost that is ( labour , Materials , planning + 20 % Professional Fees + Cost of site you would be looking at E400 + per sq foot to replace it ) April 20th , Terenure quality houses are selling E50 to E100 per sq ft below there replacement cost, if demand continues to deplete inventory prices will go up another 20 % this year . Building will resume because it will be profitable . This is not a bubble either it's a real market, with a lot of all cash buyers or 30 to 50 % down payment buyers , it not being fuelled by dummy credit merchants


The article is http://www.irishtimes.com/business/sectors/commercial-property/opinion-no-concrete-data-behind-race-to-build-new-homes-1.1768238


But the Cost of Building a House to a Developer excluding Site Costs is approximately €100 per Foot². Zoned Building Land is being hoarded. We create artificial scarcity by zoning building land. Why keep making Dublin Bigger?

Why not start a new City well above sea level? A new City with /energy efficient Buildings and sustainable Transport. A linear City along the M3 Motorway.


Top
 Profile  
 
 Post subject: Re: IT Opinion: No concrete data behind race to build new ho
PostPosted: Tue Apr 22, 2014 12:33 pm 
Offline
Under CAB Investigation

Joined: Jun 26, 2012
Posts: 2832
Location: The Second Æther! Hull Breach Imminent, Eschaton Immanent...
JackCall wrote:
hiphop wrote:
There's an interesting comment posted under an Irish Times opinion piece by John McManus that, if true, would help me understand why builders aren't building and why we are not in a bubble. My question is... is this true? The comment is
Quote:
John, There is concrete evidence . It's a simple mathematics for example , Currently the cost of house in Terenure is selling at around E300 to E350 sq foot. Thats a fair price is it not ? If you were to examine the replacement cost that is ( labour , Materials , planning + 20 % Professional Fees + Cost of site you would be looking at E400 + per sq foot to replace it ) April 20th , Terenure quality houses are selling E50 to E100 per sq ft below there replacement cost, if demand continues to deplete inventory prices will go up another 20 % this year . Building will resume because it will be profitable . This is not a bubble either it's a real market, with a lot of all cash buyers or 30 to 50 % down payment buyers , it not being fuelled by dummy credit merchants


The article is http://www.irishtimes.com/business/sectors/commercial-property/opinion-no-concrete-data-behind-race-to-build-new-homes-1.1768238


But the Cost of Building a House to a Developer excluding Site Costs is approximately €100 per Foot². Zoned Building Land is being hoarded. We create artificial scarcity by zoning building land. Why keep making Dublin Bigger?

Why not start a new City well above sea level? A new City with /energy efficient Buildings and sustainable Transport. A linear City along the M3 Motorway.


Or build on top of the old city, much like OCP's New Detroit initiative


Top
 Profile  
 
 Post subject: Re: IT Opinion: No concrete data behind race to build new ho
PostPosted: Tue Apr 22, 2014 12:38 pm 
Offline
Under CAB Investigation

Joined: Jun 24, 2010
Posts: 2046
Location: Dublin 12
Col. Max Pyatnitski wrote:
JackCall wrote:
hiphop wrote:
There's an interesting comment posted under an Irish Times opinion piece by John McManus that, if true, would help me understand why builders aren't building and why we are not in a bubble. My question is... is this true? The comment is
Quote:
John, There is concrete evidence . It's a simple mathematics for example , Currently the cost of house in Terenure is selling at around E300 to E350 sq foot. Thats a fair price is it not ? If you were to examine the replacement cost that is ( labour , Materials , planning + 20 % Professional Fees + Cost of site you would be looking at E400 + per sq foot to replace it ) April 20th , Terenure quality houses are selling E50 to E100 per sq ft below there replacement cost, if demand continues to deplete inventory prices will go up another 20 % this year . Building will resume because it will be profitable . This is not a bubble either it's a real market, with a lot of all cash buyers or 30 to 50 % down payment buyers , it not being fuelled by dummy credit merchants


The article is http://www.irishtimes.com/business/sectors/commercial-property/opinion-no-concrete-data-behind-race-to-build-new-homes-1.1768238


But the Cost of Building a House to a Developer excluding Site Costs is approximately €100 per Foot². Zoned Building Land is being hoarded. We create artificial scarcity by zoning building land. Why keep making Dublin Bigger?

Why not start a new City well above sea level? A new City with /energy efficient Buildings and sustainable Transport. A linear City along the M3 Motorway.

D
Or build on top of the old city, much like OCP's New Detroit initiative


Done millennia ago, Lads.
Ever heard of New Troy, and New New Troy, and New New New Troy ........ !?!


Top
 Profile  
 
 Post subject: Re: IT Opinion: No concrete data behind race to build new ho
PostPosted: Tue Apr 22, 2014 12:41 pm 
Offline
Under CAB Investigation

Joined: Jun 26, 2012
Posts: 2832
Location: The Second Æther! Hull Breach Imminent, Eschaton Immanent...
Tis Meself wrote:
Col. Max Pyatnitski wrote:
JackCall wrote:
But the Cost of Building a House to a Developer excluding Site Costs is approximately €100 per Foot². Zoned Building Land is being hoarded. We create artificial scarcity by zoning building land. Why keep making Dublin Bigger?

Why not start a new City well above sea level? A new City with /energy efficient Buildings and sustainable Transport. A linear City along the M3 Motorway.

D
Or build on top of the old city, much like OCP's New Detroit initiative


Done millennia ago, Lads.
Ever heard of New Troy, and New New Troy, and New New New Troy ........ !?!

New York? New Delhi? Newquay? I had no idea...
New South Wales...


Top
 Profile  
 
 Post subject: Re: IT Opinion: No concrete data behind race to build new ho
PostPosted: Tue Apr 22, 2014 1:10 pm 
Offline
Under CAB Investigation

Joined: May 2, 2008
Posts: 1545
Location: Ireland
Eschatologist wrote:
Is there a similar stand off between landowners and builders as there is a perceived stand-off between owners and buyers?


I doubt it with the 80% rezoning tax.


Top
 Profile  
 
 Post subject: Re: IT Opinion: No concrete data behind race to build new ho
PostPosted: Mon Sep 15, 2014 11:34 am 
Offline
Too Big to Fail

Joined: Feb 6, 2007
Posts: 4172
I love these airy fairy build costs that are used to justify sky high costs.
If you want to find out what "real" build costs are, ask a builder what it cost to build his own house and you'll notice an enormous gap between that cost and the cost to build a much lower spec house for somebody else.

_________________
When Chuck Norris buys a house he wears a Bertiebasher T shirt - ewd3

Ruminations of a Rain Sozzled Paddy blog


Top
 Profile  
 
 Post subject: Re: IT Opinion: No concrete data behind race to build new ho
PostPosted: Mon Sep 15, 2014 4:15 pm 
Offline
Planning Tribunal Attendee
User avatar

Joined: Nov 21, 2006
Posts: 1077
gaius wrote:
I love these airy fairy build costs that are used to justify sky high costs.
If you want to find out what "real" build costs are, ask a builder what it cost to build his own house and you'll notice an enormous gap between that cost and the cost to build a much lower spec house for somebody else.


Mates rates perhaps?

_________________
"The not-so-hidden subtext behind all this yelling for debt forgiveness in the meeja is that the infantile and greedy debtmonkeys want all the debts to magically disappear, but they also want to retain ownership of the assets - and any income streams from those assets in the future". - Sidewinder Apr 13 2011


Top
 Profile  
 
 Post subject: Re: IT Opinion: No concrete data behind race to build new ho
PostPosted: Mon Sep 15, 2014 4:27 pm 
Offline
Too Big to Fail

Joined: Jan 12, 2008
Posts: 4081
Location: California
dolanbaker wrote:
Replacement costs don't include the cost of the site, assuming it's for insurance purposes as you already own it!
Anyone who snapped up sites at the bottom could make a good profit now it they built, but I expect they're waiting for the market to rise further first.


Plus, 20% in professional fees sounds very high when you're talking about cookie cutter housing estates. I'm not sure but I'd be amazed if any Irish builder pays that out to architects/engineers/solicitors.


Top
 Profile  
 
 Post subject: Re: IT Opinion: No concrete data behind race to build new ho
PostPosted: Mon Sep 15, 2014 7:54 pm 
Offline
Under CAB Investigation

Joined: Apr 9, 2014
Posts: 1658
I am curious what do pinsters think are the costs to build a housing estate (100 x 1200 sq ft semi D to allow for economies of scale) in Dublin?

Build costs to current Dublin building regulations and labour rates (nothing fancy basic fittings)
Professional fees (planning permission)
Professional fees (building supervision)
Ground works, roads, provision of electric, sewerage, telephone, cable, etc
Estate landscaping
Development fees
Social and affordable housing provision
Legals for land purchase and sub division of site
Finance costs
Legals for selling the properties
Fit out of show house
Marketing and advertising costs
Estate agent fees
Profit margin
Plus VAT on all the above @ 13.5%


Top
 Profile  
 
Display posts from previous:  Sort by  
Post new topic Reply to topic  [ 19 posts ]  Go to page 1, 2  Next


Who is online

Users browsing this forum: No registered users and 1 guest


You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum

Jump to:  
cron