Irish Examiner view: Housing obstacle

Building cost inflation

Ireland’s biggest builder warning that inflation could add €10,000 to the cost of building a home. Picture: Gareth Chaney/Collins

Yet another obstacle to home building was unearthed this week, with Ireland’s biggest builder warning that inflation could add €10,000 to the cost of building a home.

Cairn Homes chief executive Michael Stanley was the one who sounded that note of alarm, saying additional material and labour costs show no sign of unwinding.

He added that Ireland’s relative economic success had to be “underpinned by more significant investment and new housing delivery, from both the State and the homebuilding industry”, which seem reasonable points to make.

Mr Stanley’s intervention is timely, particularly when it comes to investment by the State. 

Late last month, Housing Minister Darragh O’Brien announced a plan to reduce the cost of construction by scrapping the development levies required to connect new homes with roads, water, and other services; it was envisaged that subsidising such development levies would save up to the value of €12,650 per home on average.

On the face of it, this looked like a positive move which might help hard-pressed buyers, but at the time the Government had to admit that it could not guarantee that the reduction in costs would be passed on to those buyers.

That admission now looks more prescient than ever. 

Observers would be forgiven their cynicism at this sequence of events — the Government announcing a potential €12,000 drop in costs, closely followed by developers warning of a potential €10,000 rise in costs.

From this vantage point, it looks like “significant investment” from the State, as Mr Stanley hoped. Over to the homebuilding industry to do more than warn about increased costs.