Councils paying up to 50% more for construction of social housing than they were two years ago, department figures show

Local authorities are paying private building contractors considerably more for social housing than they were two years ago, in some cases 50 per cent more, according to data obtained from the Department of Housing.

The figures also indicate that construction costs for similar-sized two- and three-bed units varied considerably, over and above what might be explained by location, development type or regional market variation.

The findings highlight the unusually high cost of social housing projects here even when the units are being built on public lands while raising questions about the ability of local councils to control costs.

The figures, which are based on the department’s own audit of the construction costs of new build schemes, show that local councils here paid on average €317,667 for three-bed social housing units constructed on their own lands last year. This was up by more than 50 per cent on the €211,518 average recorded in 2020.

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The average per unit construction cost of a three-bed apartment was estimated to be €410,417 in 2022. This was up 34 per cent on the €306,096 figure recorded in 2020. There were similar cost increases for other social housing and apartment types.

The figures also detailed a range for the construction costs applying to each unit type. In the case of a standard three-bed housing unit the range of costs per unit was €205,000-€429,000. For a four-bed housing unit the range of costs per unit was €252,000-€432,000, while the range for a three-bed apartment was €268,000-€451,000.

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“The range of costs recorded vary, depending on design, location and on the level of abnormal requirements for each scheme, for instance existing site conditions, demolitions, service diversions and site access requirements,” the department said in a note accompanying the figures. “It is understood by all involved in advancing social housing projects that a range of factors can impact on the costs for individual projects.”

The figures were provided by Minister for Housing Darragh O’Brien in response to a parliamentary question from Sinn Féin’s housing spokesman Eoin Ó Broin.

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“It’s clear from the figures that there’s been a dramatic rise in construction costs since 2020,” Mr Ó Broin said.

He said the Government needs to investigate the figures further – on a scheme-by-scheme basis – to establish what is driving this.“How much of it, for example, is construction sector inflation. How much of it is regional market variation. How much of it is specific to the procurement process.”

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Part of the problem, Mr Ó Broin said, might stem from a lack of competition amid reports that less and less building contractors were tendering for State projects because of the high costs involved.

The department’s figures come in the wake of an independent audit of more than 1,000 Dublin homes, released last week, which found that Dublin City Council has been paying in excess of 40 per cent more for the construction of social housing than private sector developers.

The report found that council officials had been “severely restricted” in their ability to control costs within government and EU procurement rules and systems.