Financing constraints, utility delays and planning problems will continue to frustrate the delivery of housing in the short term, quantity surveying firm Buildcost has warned.
In its latest construction cost guide, the company said tender price inflation, a proxy for inflation in the construction sector, settled at 3 per cent last year and rose at a rate of 1.5 per cent in the first half of 2025 “mirroring the second half of last year”.
“The key challenge for the industry is to deliver viable housing units to meet the Government’s target of 50,000 units per annum,” it said.
Last year new home completions fell back to just over 30,000 against a Government target of 34,000. This year’s target of 41,000 is also unlikely to be met.
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In its report, Dublin-headquartered Buildcost said the “availability of labour, utilities, infrastructure, and planning will continue to challenge project delivery in 2025″.
It pinpointed financing constraints, utility delays and planning as issues likely to slow delivery, “especially in the apartment sector”.
It highlighted that the Department of Housing’s own cost estimate for delivering a two-bed suburban apartment in Dublin was now almost €550,000.
Buildcost noted that “small tweaks” in design could add significant additional costs. An extra 5 per cent of floor area can add €7,000 per unit, it said.
In a segment on the revised apartment design standards, Buildcost estimated that the revised standards could, if implemented in full, save up to €50,000 in per-unit construction costs.
New design standards reducing the minimum size of apartments were issued by Minister for Housing James Browne last month.
Under the new standards, the minimum size of a studio apartment is reduced to 32 sq m from 37 sq m, while there will be no restrictions on the specific mix of units within a development.
Buildcost director Liam Langan noted that if all the changes were introduced (on a set of schemes reviewed by the company) savings of circa €50,000 on the construction costs were possible.
“Whilst it may not be possible to incorporate all the revisions, nonetheless, it will help make apartment costs more viable,” he said.
“There are other areas that need to be looked at such as investment in infrastructure, a better resourced planning authority,” Mr Langan said, while also suggesting a review of the VAT rate should be considered if the Government wanted to achieve its target of delivering 50,000 units per annum.
