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Cost of delivery and house prices

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Sir, – In Orla’s Hegarty’s letter (February 7th) in response to my opinion piece (“Even with State subsidies, it is not realistic to expect house prices in Dublin to come down dramatically”, Business, Opinion, February 5th), she noted that in order to deliver houses cheaper in Dublin, a good starting point would be to look at the new homes being delivered for €285,000 elsewhere in the country. As well as ignoring the fact that key inputs such as land, labour, development levies and fees are higher in the capital, she also failed to mention that her comparisons to the 114sq m three-bedroom semi-detached home in the greater Dublin area included a 78sq m two-bed mid-terraced home in Mullingar delivered by a scale operator.

Prof Hegarty’s view that the market, not costs, dictates house prices is based on out-of-date cost and affordability data. In current circumstances, where the cost of delivery is equal to or higher than the level of affordability, any market influence is neutralised. I have repeatedly suggested that full protection against any potential for an improved market to impact pricing can be counterbalanced by Government supports being based on open-book accounting and subject to a reasonable, capped developer margin.

Prof Hegarty’s dismissal of the relationship between cost of delivery and house prices only further demonstrates how out of touch the public discourse around the delivery of housing has become. – Yours, etc,

MICHAEL O’FLYNN,

Chairman and CEO,

O’Flynn Group,

Ballincollig,

Cork.

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