The significance of Dublin City Council's recently announced plan for a €20 million estate of 61 council homes in Ballyfermot was not the re-emergence of direct local authority building after a near-complete hiatus since the crash, but the price tag attached to each unit.
A back-of-the-envelope calculation suggests the average construction cost of an apartment in the scheme, which includes 29 one-bedroom apartments and 12 three-bed duplexes for families, is nearly €330,000, a hefty sum when you consider it excludes the price of the land, which the council owns.
Is the council getting the best value for money or does the cost of the scheme simply reflect the rapid rise in construction costs, often cited as the chief obstacle to supply?
Last year, the Society of Chartered Surveyors Ireland (SCSI) was accused of inflating construction costs by suggesting the cost of developing a typical three-bed semi in Dublin was €330,493, a figure which includes the land value and a reasonable developer's margin. In light of what Dublin City Council is paying, this estimate now appears modest.
Ideological stance
Since the 1980s, successive Irish governments have moved away from funding large-scale social housing projects, deeming the private market a more efficient model for dealing with the State’s housing needs. Despite the crash and burn of the last decade, this ideological stance hasn’t changed – if anything it’s hardened.
While there is no specific pricing point that equates to affordable housing, some suggest €280,000 might be a fair estimate. The calculation is based on a two-income family earning €80,000 and qualifying for a mortgage, under the current rules, of €280,000. Juxtapose this spending power with the average sales price for a home in Dún Laoghaire last year, which was €450,000 or the average rent paid, which was €2,200, and you can see the property divide that is emerging in some parts of the State.
The Government’s plan to crank up housing supply to a target level of 25,000-30,000 units a year will deliver greater choice for a certain cohort of buyers, but few options for many others, particularly if these cost metrics are borne out.
