Sir, – The elephant in the room in discussions about bringing down the cost of construction to increase housing supply is that nobody except builders knows what the true cost of construction is and they won’t tell anybody as that would give the game away.
The reputable construction consultancy Bruce Shaw Partnership produces guide figures based on tenders that show Irish residential construction costs for an apartment to average €1,844 per square metre (including VAT). In Munich this would be €1,300 per square metre; in Amsterdam, it’s €1,440.
These Irish costs are accepted without question and form the basis for arguments to reduce other costs (and standards), but are flawed.
First, as anybody who deals with tenders and contracts knows, tender prices have a built-in margin of unknown quantity – possibly up to 20 per cent, and maybe more. Second, the cost on the ground, especially for labour, is not necessarily the same as the price in the tender. Third, there can be strategic overpricing in tenders thereby skewing the average costs.
In addition, where developers are also builders – common in Ireland – there is no competitive tendering process at all, so nobody knows what the real construction costs are.
Calls to reduce apartment sizes, to cut VAT on construction costs and reduce levies are a distraction technique from an industry for which higher costs equal greater profits, and where there’s no guarantee any savings will be passed on to purchasers. – Yours, etc,
Dr LORCAN SIRR,
Dublin Institute
of Technology,
Bolton Street,
Dublin 1.