The cost of building modern houses is at a level that no longer works for people. Workers on good salaries are struggling to find homes they can afford. For several reasons, the cost of production being just one, housing has become a premium product, increasingly out of reach for many and a deeply divisive fault line through the global economy.
The Department of Housing’s latest assessment of development costs here puts the cost of delivering a two-bed apartment in Dublin at €549,790 in the suburbs and at €591,783 in urban areas. The report confirms what industry practitioners have been saying, namely that the cost of development here makes it impossible to build within reasonable price parameters.
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“We’re now faced with a challenge in every developed economy where housing cannot be delivered at four to five times the industrial wage ... that’s just a reality,” Cairn Homes boss Michael Stanley said recently. His counterpart in Hines Ireland, Brian Moran, also spoke recently on the same topic, insisting it wasn’t the market driving the price but the cost of production. He linked high development costs to regulations and tax.
Northern Ireland, he said, had decided to have lower space standards, lower build quality and no VAT “so they end up with something that costs €496,000 in Dublin costing €300,000 in Belfast”.
“Other countries have similarly prioritised affordability over space and quality; we’ve decided on a particular standard and I’m not suggesting we cut our standards but I think we’ve slept-walked into a situation without thinking of the cost implication of having great space standards and high-quality building,” Moran told the recent Dublin Economic Workshop.
Instead of trying to address the elevated cost of production, the Government’s answer is to help buyers pay more through various support schemes, a solution that merely keeps end prices elevated.
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