The Social Housing Costs Thread

I’ve always been slightly puzzled by the press coverage that accompanies announcements about new social housing development.

In many cases the build cost looks very high, often higher than just building existing units in the area.

Here’s a thread for keeping track with examples.

Plans are afoot for a new build by Wicklow County Council of 42 units in Bray. Details are here:

An overall price of €14.7m has been given. Mention is also made of a boom-time purchase price of €6m for the land. From what I can tell this is not included in the €14.7m.

So we are looking at a cost of €350k per unit just to build. 14 of these are apartments and there a lot of one-bed units. So an underwhelming total of 79 bedrooms in the whole lot, or €186k per bedroom.

It is an infill site in a built-up area so presumably no issues with electricity, water, gas connections, etc. There will be a single road on the whole site.

€350k is a lot of money. About ten years of full-time work on average wages.

In 1978 output per worker in Ireland was about £9000, wages per worker were likely lower. New houses cost just over £20,000, a much lower ratio than today.

Why is new social housing so expensive today compared to then?

This doesn’t make sense. There is a major new mixed development nearby in Newtownmountkennedy of hundreds of homes. The 3 beds are going to 230K. See:

If the private developer can sell at that cost (and that would include the site cost), then there is something fishy going on in Bray.

Why not just buy a load of the houses in Newtown? Would save a lot of money.

At €166k per unit for 72 three-bed homes this seems more reasonable.

Story makes clear that the site was already owned by DCC.

That link brings me to google luxembourg :nin

The Government says for a 3bed in Dublin €205k, national €154k - based on current unit cost ceiling data prepared from State tender returns

That is lower than the Society of the Surveyors of Chartered Surveyors Ireland costings

As Colm McCarthy said on Newstalk this morning to Pat Kenny…“We have to admit that my house and your house is overvalued” :slight_smile:

Fixed that :smiley:

That link is useful.

Not at all clear why Dublin build costs should be 1/3 higher than outside.

Do they assume that all labour is strictly local? That would probably increase costs by at least a bit, assuming that Dublin wages are higher than other locations. Higher local storage costs for plant and materials might also bump it up a bit. Still, a third is hard to justify.

Had a builder quote me for a job in Dublin that he had previously done for a friend in Wexford. It was a third more expensive. Ie 100k to 150k. I queried this and his response was that people have more money in Dublin! He was actually serious and couldn’t see anything wrong with this…

That’s a half more expensive!

Price discrimination is normal in many markets - ie, charging more for the same product to customers with a higher willingness to pay - but I can’t see a builder getting away with charging 50% more just because and not being undercut by competitors.

Dublin is somewhat more expensive than the rest of Ireland, but not the way Paris or London are to the rest of France and England.

If you’re sitting round the table at the Department of Finance (and thus barely numerate and probably cross eyed ) it makes perfect sense

  • the State sold a lot of property at below cost of construction to foreigners as Nama unwound
  • to balance the ‘other side’ of the equation the State must now buy property at above the cost of construction

The state would be working against its aims if it bought too cheaply

1 Like

This website claims that for a house price of €236k… €76k is taxes. Is that true?
**Typical Irish home build costs
Per Unit: Amount:
Site Cost €50k
Build Cost @ €100 psf, Size Average 1,100 = €110k
Roads & Infrastructure €15k
Utility Connections €2k
Legal Fees on Acquisition and Disposal, Marketing, Estate Agency Fees. €6k
Architects, Quantity Surveyors, Consultants, Homebond and Stamp Duty. €2,500
Part V Contributions to social housing €5k
Council Levies ~€10k
Cost of Finance €7,500

Total Costs €208k, VAT @ 13.5% €28k
Sale Price €236k (equivalent French starter home €160,000)**

The above costs refer to the construction of semi detached units with a density of 8 -10 per acre. We need to move away from considering that crud as being a sustainable form of housing. It isn’t.

Victorian and Period housing was typically 30-35 units per acre and the Garden City designs of the 20th Century typically had 20-25 per acre. Higher density produces perfectly desirable housing.

If the State grants a fixed contract to a builder to build 1000 units then the profit margin could be reduced from 17.5% to less than 5%. The economy of scale would hugely reduce the construction costs, material costs, infrastructure provision costs etc. The State already owns the land (or could acquire it for 10k per acre), but this shouldn’t be an excuse for constructing masses of ugly sprawl. For social and affordable housing we should be aiming at 30 units per acre, terraced housing (750-800sq ft), mid rise apartments, mixed in with work/live units, larger multi generation units that encourage families to care for elderly family at home and in their community.

There is no shortage of urban design examples from around the world to show how to create desirable housing in healthy communities with good facilities and good prospects. All it takes is a bit of vision.

Affordable housing can easily be provided for €90k per unit including all costs (site, infrastructure contribution etc).

1 Like

If you’re building a simple apartment block where you’re dropping in prefabricated bathrooms etc. then you can probably hit sub 100k levels.

If you’re building terraced or semi-detached style properties then it’s not possible.

It takes 9-12 months from groundworks to handing over keys for a terraced house, for a cost of 90k with a modest 5k profit, 50k of material, labour would need to be 35k - that’s unrealistically low with Irish wage costs and for the number of people and time required.

Also social housing when handed over is expected to have flooring, bathrooms, kitchens fitted, so could have taken more labour than a standard builders finish house.

I can assure you that €90k for 750-800 sqft terraced housing fully finished is easily possible. I build houses and I’m aware of the costs involved.

Ah, but do you build them to current standards?

Ps - does your 90k figure include costs for access roads, electricity and gas connections, vat, development levies, professional fees and finance costs?

And finally, how many houses have you delivered for €90k in the last 36 months?

What are the economies of scale in construction? You get (I guess) a bit of savings on procurement. But you cannot really speed up the process of laying blocks, or pouring concrete or plumbing.

For the rest, particularly going for bigger densities, I fully agree.

Bit of a stupid question. Why wouldn’t I be building to the current standards? If you understand the process of building a house perhaps you could explain why I would be building sub-standard housing. For your information I’ve been building passive standard houses that far exceed the current standards for the simple reason that’s what my clients want and that’s what I specialise in.

Cost of access roads depends on the size of the site so how long is a piece of string?, but yes access roads, drainage, footpaths, landscaping included. Social and Affordable housing is exempt from development levies, but I have allowed 3k per unit towards associated costs. If the State was building 1000 houses then the professional fees could be kept in house and minimised. The contractors professional fees (engineers, surveyors, etc included in the amount). The State would also cover the cost of finance because it can avail of by far the lowest rate. Why would the State allow itself to be charged 10% on money it can get for 1%? VAT included in the figure.

Most of my projects are 2000sqft+ because the only people building houses are people with access to money. That’s one facet of the problem. The only way to address it is for the State to step in and build houses.

If the State took half of the €500 million per year it gives to landlords to inflate their rents and instead used it to finance an affordable house building program it could build 50,000 units (€5-6 Billion investment). Half of these units could be immediately rented for €4-5k per annum and that would relieve the pressure on rents right across the housing market, saving the State hundreds of millions of euros that would other wise be given to landlords. The State could use the rent roll from the properties to finance the maintenance of the units, while also selling the remaining 25k units to recoup their cost and allow the creation of a further investment round for the next 50,000 units. By lowering the cost of living it would allow the creation of household wealth and feed back into the economy.

1 Like

The savings on building multiple units are right across the board, but very much so on labour. It’s amazing to watch how subcontractors figure out exactly how to maximise their productivity on a large site. As an example it wouldn’t be unusual for a pair of electricians to first fix 3 apartments in a day. The same electricians could easily spend 2 days on a single house because it would be more complex. When they are familiar with the layout they fly through the work. Of course it’s not a linear trend and at a certain scale of project the savings can’t be improved on.

1 Like

Fascinating posts Coles.