Has the Irish building sector got themselves hooked on Government subsidies?
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What is the main topic discussed in this episode?
Hello, I'm Ciarán Hancock. Welcome to Inside Business. This week I'm talking to the Irish Times' new recruit, Cillian Woods, about a government scheme to support the building of apartments in our cities, which looks set to miss a key target. You'll hear from Cillian in a few moments. And in the second half of the programme, Eoin Amara Walsh, the CEO of the Irish Tourism Industry Confederation, explains why the country is in danger of not having enough bedrooms to accommodate tourists.
What is the government scheme for apartment building in Ireland?
First to apartment building. Cree Quineha Cities is a government support scheme to help plug the affordability gap to support apartment building, which is a key plank in the state's plan to solve the housing crisis. Earlier this week, Cillian Woods wrote a story in the Irish Times stating that the scheme was in danger of missing a key target of building 5,000 new apartments over the lifetime of the programme. He joined me in studio to explain why. Here we go. So, Cillian Woods, welcome to Inside Business. It's your debut having joined the Irish Times from the Business Post. Yeah, I'm looking forward to it.
Yeah, good.
Well, wait till the end of the interview before you say that. Now, you were writing a very interesting story just a few days ago about Cri Quineha, the scheme that the government launched in 2022 to try and help bridge the gap between how much it costs developers to build an apartment and the price that owner-occupiers can afford to pay for those apartments. And a budget was set aside and the hope was to build 5,000 apartments. But it seems we're way off beam in terms of the number of apartments that have been built for the money that's being spent. So another example of a government funded project that's gone over budget, if you like.
Just to set the scenes, but there's, yeah, Creecon is what, we're talking about Creecon as cities here and there's Creecon as towns. There was two wings of this scheme, which was both aimed at trying to get, one was getting apartments built, the other one was bringing vacant homes in towns back to use. It's kind of confusing to have two completely different schemes. Okay, we're talking about the city's one. But the city's one is. Yeah, so it is another case of the government, I suppose this was a scheme introduced to try and chase apartment costs in a way that maybe they wouldn't put it that way in their own description of it. But apartment costs have gone through the roof. That's from a number of different reasons.
That's because building them has gotten very expensive just for raw materials. Borrowing costs have gotten very expensive. Interest rate hikes also made them very, very expensive to build. Is it because the builders are paying too much money for the land? That might be the case now. There's definitely apartments still being built on land from back in the nowadays when some of the big builders would have gotten very good deals on the land to build on, shouldn't be facing those high building costs as opposed to land. But really, they say it's the raw materials, it's the inputs that are really going up and flying up. And they can see that in some of the paperwork produced for the department showing that.
I think in Dublin now, Dublin city centre, central Dublin, as opposed to Dublin city central, we're looking at about 605,000 to build an apartment in Dublin central, not city centre in central Dublin, but in the canals. And then beyond that, like outside the M50, we're looking at about 550,000 to build an apartment. That's huge money, isn't it? It's massive money for what...
Why is the Cri Quineha cities scheme at risk of missing its targets?
What traditionally have been seen as maybe a lesser product to a house, especially when you're talking about like whatever about... And what's that, a one, two, three bed for 600k? That would be a two bed, just a normal size, not a small two bed, just a normal size, regular run-of-the-mill two bed apartment with decent spec because that was considered in the spec for when they were doing that research into how much it would cost to build apartments. So they were looking at outside of the M50 for not even necessarily a good location, like 550 grand to build an apartment.
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Chapters
6 chapters
1
What is the main topic discussed in this episode?
0:02–0:28
2
What is the government scheme for apartment building in Ireland?
0:28–2:57
3
Why is the Cri Quineha cities scheme at risk of missing its targets?
2:57–18:01
4
How does the budget allocation affect apartment construction?
18:01–20:59
5
What challenges are developers facing in the current market?
20:59–33:31
6
How does the subsidy system impact the building sector?
33:31–39:57
Speakers
3 identifiedMore from Inside Business with Ciaran Hancock
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