If we are ever going to get to grips with the housing crisis, policy changes have to be based on hard evidence. In this context, the latest data from the Society of Chartered Surveyors Ireland (SCSI) provides some guidance, but also points to a few conundrums. In particular, if apartments are as expensive to build as the figures show, big changes are needed if they are ever to be affordable.
Taking an overall view, the report argues that in many cases building new apartment developments in Dublin will not be commercially viable. This is because the price of building would put the apartments out of reach financially for many potential purchasers.
The society identifies some policy measures which could help such as an increased supply of serviced land, flexibility in design and cheaper financing.
The breakdown of costs of building different apartment types in the SCSI study does contain some surprises. In particular, the society estimates that building what it calls “medium-rise” apartments – of six to eight storeys – is significantly more expensive than low-rise developments. The cost of medium-rise apartments, estimated at €470,000 to €578,000 per apartment in Dublin city, would put them out of reach of many buyers.
The society warns that “the higher you go, the greater the costs”, and puts this down to the more complex structure of taller buildings, the need for more mechanical and electrical services, facades, basement parking and so on. This runs directly counter to demands from the building industry for a lifting of existing height restrictions to allow a greater level of development on one plot.
You would also think there would be a point where the costs referred to by the society would be offset by the revenue from bringing more units on stream.
Either way, clear information is needed on a countrywide basis to inform any planning changes. There is little point having an endless debate about the aesthetics of higher buildings if the numbers do not add up.
Overall, the report raises questions about the argument that more apartments – as opposed to more houses – are a key part of the solution to the housing crisis. For this to be the case the average apartment must be notably cheaper to build and thus to sell. The SCSI analysis puts a question mark over this.
