Government launches scheme worth almost half a billion euro to kickstart apartment construction

A recent study from Trinity College Dublin found that Ireland was the second most expensive place to build apartments in Europe at €2,363 per square metre.

The Government has gone to tender for a scheme worth almost half a billion euro in funding to developers to build new apartment blocks in Irish cities.

The Croí Cónaithe scheme is making €450m available with the aim of delivering 5,000 new apartments in Dublin, Cork, Limerick, Galway, and Waterford.

This is the third time the Housing Agency has made a call for developments under this scheme, which said it is about bridging the “viability gap” between the cost of building apartments and the market sale price, where the cost of building is greater.

However, to date, just five contracts have been signed under the scheme, aiming to deliver a total of 582 apartments.

It comes after a recent study from Trinity College Dublin found that Ireland was the second most expensive place to build apartments in Europe at €2,363 per square metre.

Under the Government’s Housing for All plan, this scheme aims to kickstart the construction of schemes to activate some of the 80,000 to 90,000 uncommenced apartments with planning permission in Irish cities.

“The development of apartments is expensive, particularly in urban areas. Apartments have larger structural elements such as lifts or underground car parking which make construction more expensive than for houses,” the Housing Agency said.

“Apartments can only be sold or rented once the entire complex is finished, unlike houses in housing estates which can be built in phases. These factors make it difficult to build apartments at a cost below the market sale price and result in a viability gap.” 

The maximum funding it will give to developers for each apartment is €120,000 and it wants these apartments to be delivered in 2026 or 2027, it added.

Social housing schemes

Separately, the Department of Housing is also set to spend €70,000 for a research paper to see how other jurisdictions run their social housing schemes.

It wants a breakdown of how the social housing systems in the UK and each EU member state are run.

This must include the relationship between social housing provision and the private rental sector, “in particular describing any policy mechanisms which use the private rented sector as a source of subsidised housing, and whether such housing is considered to be social housing”.

The Government has been repeatedly criticised for its progress in developing social housing and its over-reliance on the Housing Assistance Payment (HAP) to provide social housing through the private market.

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In 2023, it missed its social and affordable housing targets. Having sought to deliver 13,130 social homes last year, just 11,939 were delivered.

And, in the first three months of this year, just 158 new-build social homes were delivered according to Department of Housing data.

However, the latest Construction Status Report does show that there are 9,179 social homes under construction at the end of March, while a further 15,848 are at both design and tender stages.

While there have been low levels of delivery, the Department of Housing has highlighted that significant levels of social housing completions take place in the second half of the year, but mostly in the final three months.