Only elite can afford entry level homes
JUST over a month ago, the Minister for Housing and Urban Development, Damien English launched a new scheme of 12 social houses at George’s Place in Dun Laoghaire — a council district in which there are currently 5,500 on the social housing waiting lists. Dun Laoghaire-Rathdown has the high insulation German-developed Passivhaus standard as its standard. So I was particularly interested in how much the George’s Place homes cost to build. This proved a bit tricky to pin down at first but eventually I discovered they worked out at around €240k per two-bed unit, aside from land value. The land was the Council’s own.
Throw in the price of a Dublin site and additional costs, which the council doesn’t have to pay (such as the expensive levies it usually charges developers) and this takes us to between €340k to €350k for a two-bed terrace house, if the same homes were to be developed privately.
While there is no doubting the quality of these A-rated Sisk-built homes, their cost presents a troubling picture for those of us who will not be socially housed and might consider ourselves to be average middle class earners.
At present an average Irish couple earns an average income of €40k each, therefore current loan multiples allow them to stretch to about €300k to €315k of a mortgage (with a deposit saved and parents gifting). This means that the so called ‘middle class’ of Dublin (and we can include Cork and Galway cities) actually can’t afford to buy the privately developed equivalent of these entry level mid-terrace two-bed social houses.
So now I wondered if they might be able to afford the ‘private’ equivalent of the capital’s cheapest new social houses?
Let’s take the famous modular social homes provided in recent years in Poppintree in Dublin as our example. The location borders Ballymun and Finglas. Here we see a cost of €191k per home without land, levies, Part V contributions and developer profit. So if these terrace homes were manufactured (they were factory-built in Belfast) for the private market, then you could once again add around €100k to estimates to account for land and additional costs. So at €291k, the average earning middle class couple would just about squeak over the affordability line for a Poppintree kit home that lasts 60 years.
So what about the cheapest build social housing apartments? A year and a half ago Dublin City Council estimated the cost for two schemes totalling 70 social apartments built in modular ‘stackable’ format to be €15m for locations in Fishamble Street and in Coolock. That works out at €214k each for a ‘stackable’ apartment built in the most affordable manner allowable by the state. But once again add in the costs the council doesn’t have to pay and you’re looking at €314k — again right on the affordability threshold for a middle class couple earning €80k per annum between them.
Social homes are usually considered to be in the no-frills level category of housing, so this is a very worrying picture indeed for middle income earners.
Looking at the wider picture for private builds we can refer to recent figures by the Society of Chartered Surveyors of Ireland (SCSI) showing that all in, it costs €330k to build an average home in Ireland today when we have already seen that the average mortgaged couple can borrow just €300k to €315k.
Elsewhere in rural towns, prices are rising because no homes are being built. In turn no homes are being built because they cost more to construct than the finished home will sell for. Development is therefore not viable. But the irony is that if they do eventually reach the price point at which they become economically viable, it might also be the point at which they become unaffordable to an average earning mortgaged buyer.
Construction standards were raised significantly in Ireland after the crash and will be raised again shortly as we head towards Zero Energy homes — those which don’t use more power than they generate. But what’s the point in having super standards for new housing if average earners can’t afford even the cheapest homes built to these standards? Have we raised the bar too high? Have we upgraded our housing out of our own reach?
Then there’s the construction industry itself and its reluctance to move beyond traditional methods and materials, which have also become relatively more expensive.
But some self builders have shown that this stark price picture for housing might not be the grim lot that all of us have to accept.
For example Michael Mills and his wife Anna completed their 2,000 sq ft home (twice the size of an average semi) in Navan for a remarkably low outlay of €150k. Built to fully Passivhaus standards it costs €260 a year to heat. They achieved this by keeping design ultra simple and opting for cheap construction materials. Among other savings, they used corrugated anthracite roofing instead of expensive tiles. That’s about €250k to build their spacious double fronted house in Dublin. They say their biggest problem was contractors who were reluctant to move from traditionally expensive materials and methods and work with theirs.
Ten years ago the well known architect Dominic Stevens built a 600 sq ft three bedroom house mortgage free in Leitrim for just €25k. He built it with his friends using cheap materials in 50 days. He did it to show that housing needn’t be price exclusive. He still lives and works there. That’s €125k to build it in Dublin (with €100k added for the site).
Do these unorthodox cases prove that the madness is in the method — and in the materials as well as in unrealistic standards? Perhaps it’s time to go back to the drawing board on housing, if we actually want to be able to buy it.
Might the madness be in the method?