The cost of building materials is pushing many people out of the market
A surge in the cost of building materials is making it impossible for many people in Donegal to break into the housing market.
The price of timber has risen by 31% since December 2019, while the cost of steel has gone up by 15%, according to a survey by the Home Builders Association. Nationally, it is expected that the cost of a typical three-bedroom, semi-detached home will have increased by up to €15,000 by the end of 2021 as a result.
A shortage of basic building materials due to the pandemic has been cited as the reason for the increase.
There are even concerns that some developers might put their projects on hold to see if prices improve, exacerbating the current housing shortage in some parts of Donegal.
This means that people who secured mortgages - and perhaps had even begun construction - prior to Covid might not now be able to afford to continue their new build.
Donegal estate agent Keith Anderson has noticed the increase in building costs. And he believes that this latest price hike coupled with the lack of rental properties is making it impossible for young people - even couples where both are working - to find a home.
“They need to be earning less than €25,000 to be eligible for social housing,” said Mr Anderson. “But when they go to the banks, they find that they need to be earning at least €35,000 to be considered for a mortgage.
“Many of them find they are earning too much for social housing but not enough for a mortgage.”
Mr Anderson said that even those who are eligible for mortgages often do not have the budget for a new build.
“A lot of them would be looking to build within the €160,000 to €180,000 bracket,” he said.
“But you need to be looking at more than €200,000 for a new build at the moment.
“Even people who have a site on family land are finding themselves unable to afford to build.”
Couples and young families are also finding it impossible to secure rental properties.
“With Airbnb it is very hard to find somewhere to rent,” said Mr Anderson.
“It is a tough time for people. They can’t get rent and can’t get a mortgage.”
So is there a solution?
Mr Anderson believes that the social housing eligibility criteria needs to be reviewed to reflect the current housing climate.
“The limit really should be raised to €35,000,” he said. “By keeping it at €25,000 the message to young couples is that they are better off if one of them is not working. That is not right, to disincentivise people to work when you could have two working people buying into an area and making a positive contribution to the community.
“The other thing I would say is that there is still good value to be found in the second hand market, especially when you get away from the main centres.
“You can get a decent house or duplex in a village or rural area within that €160,000 to €180,000 bracket.
“This is also helping to bring the villages back to life. I have seen this in Ballintra and other places.
“And if it is still the dream to have a new build, they will be in a better position to trade up after a few years,” he said.
Subscribe or register today to discover more from DonegalLive.ie
Buy the e-paper of the Donegal Democrat, Donegal People's Press, Donegal Post and Inish Times here for instant access to Donegal's premier news titles.
Keep up with the latest news from Donegal with our daily newsletter featuring the most important stories of the day delivered to your inbox every evening at 5pm.