From Department of Housing, Local Government and Heritage
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The Cabinet today (Thursday 4 May) agreed the publication of the Residential Construction Cost Study Report, a joint initiative of the Construction Sector Group and the government under the Housing for All strategy. The study promotes measures for a reduction in residential construction cost and increased standardisation in residential construction activities.
The study is another component of the Housing for All plan – specifically dealing with productivity, cost reduction and innovation in the construction sector to help make the delivery of housing more economically sustainable in the long-term.
These actions complement a range of other actions in Housing for All to help achieve economic sustainability including the development of Modern Methods of Construction and the establishment of ‘ConstructInnovate’, the new construction technology centre hosted by University of Galway.
Welcoming the report, Minister for Housing, Local Government and Heritage, Darragh O’Brien, said:
“While we are focused on many of the immediate challenges we are facing in housing, we are also committed to developing a long term robust construction sector which develops an improved and sustainable housing market in terms of volume and value. This report is an important contribution to that work.
“I’d like to thank all from the Construction Sector – including representatives from the Society of Chartered Surveyors of Ireland (SCSI), Royal Institute of Architects of Ireland (RIAI), Construction Industry Federation(CIF) and Local Government Management Agency LGMA), the Construction Sector Group (CSG) – and the wide range of industry, local government and public sector participants who gave their time and expertise to this study and I look forward to continuing collaboration with them throughout the development and implementation of these actions.”
With regard to residential development, construction costs consisting mainly of direct materials and labour account for about 50% of total development costs. This study is focused on the construction costs only and acknowledges work which has been done, and further work to be done, in examining the other 50% of development costs, which as sometimes referred to as soft costs (for example: site acquisition costs, professional fees, cost of financing, margins, VAT, marketing).
The study undertook an international comparative approach using four Irish case study projects – a semi-detached three-bedroomed scheme house, a suburban apartment building, an urban apartment building and a purpose-built student accommodation building. Costs in Dublin were compared with Birmingham, Berlin, Copenhagen and Utrecht. A number of findings were made and are detailed in the full report, along with recommendations and actions for implementation. When costed in the European comparator cities the cost of constructing the same apartment was broadly the same. The cost of building the same house was 15% less in Birmingham. Proposed actions to reduce construction costs are related to specification (standardisation, typologies and finishes) and scope of works (fixtures and fittings, appliance) and size and are laid out in detail within the report.
A collaborative approach with industry to develop standardised approaches for housing design and construction which can inform the design of policy initiatives and be used as best practice by industry is proposed by the actions to realise the cost reduction opportunities identified by the report.
Housing for All commits that the housing system needs to be placed on a long-term economically sustainable footing, Costs associated with residential construction remain high and need to be tackled to enable a functioning housing market, particularly for apartment construction.
Action 19.1 Housing for All committed to conduct an analysis of each component of the cost of construction of house and apartment development, informed by cost comparisons with comparable EU countries. The study is a shared Construction Sector Group and government initiative, facilitated by the Department of Housing, Local Government and Heritage.
The CSG nominated a Steering Group in March 2022 to provide oversight to the study, comprising representatives on the Royal Institute of Architects of Ireland (RIAI), the Society of Chartered Surveyors of Ireland (SCSI), the Local Government Management Agency (LGMA) and the Construction Industry Federation (CIF). Following a public procurement process, a construction economics consultant, Mitchell McDermott, was appointed in July 2022.
Extensive consultation with Industry took place throughout the study including engagement with the Construction Sector Group Steering Committee and industry and public sector workshops.
The key actions identified by the report are:
For more, read the Residential Construction Cost Study Report.