Willie O'Dea (Limerick City, Fianna Fail)
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79. To ask the Minister for Housing, Planning, and Local Government the measures he is taking to reduce the cost of construction; and if he will make a statement on the matter. [23068/23]

Paul McAuliffe (Dublin North West, Fianna Fail)
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One of the big challenges in delivering the targets in Housing for All is the cost of construction and the effect that has on the unit price. Will the Minister of State comment on the measures being taken by the Department to reduce construction costs?

Malcolm Noonan (Carlow-Kilkenny, Green Party)
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The Government understands the major challenges facing the construction sector from high inflation, pressures on supplies, labour shortages and rising interest rates. Under Housing for All, the Department of Enterprise, Trade and Employment, supported by our Department, has established a modern methods of construction, MMC, leadership and integration group to support the development of MMC. The group also co-ordinates across the various entities that support MMC and innovation adoption, particularly in residential construction. These measures will contribute to a reduction in construction costs. This includes Construct Innovate, the national demonstration park for MMC, the build-to-innovate initiatives, the accelerated social housing delivery programme and the Build Digital project and training.

On 4 May the Minister, Deputy Darragh O'Brien, published the residential cost study report. It prioritises actions to deliver economically sustainable housing in the long term through productivity, cost reduction, standardisation, innovation and MMC. The Government also recently approved additional measures under Housing for All to incentivise the activation of increased housing supply to help to reduce housing construction costs, including the introduction of temporary time-limited arrangements for the waiving of local authority section 48 development contributions and the refunding of Uisce Éireann water and wastewater connection charges. Both of these measures have come into effect and will apply for one year to all permitted residential development that commences on site between 25 April 2023, the date of the Government decision, and 24 April 2024, and is completed not later than 31 December 2025.

Paul McAuliffe (Dublin North West, Fianna Fail)
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I thank the Minister of State. I welcome some of the issues he detailed. I am aware of the report that was commissioned by the Department of Housing, Local Government and Heritage which found that construction costs in Dublin were significantly higher - between 15% and 30% higher - than other European cities. When the report was examined, labour costs and also additional specifications were key factors in that difference. I note that those cities that had specifications similar to the Irish standard came in at about the same figure. Still, we are effectively imposing additional specifications on building standards for good environmental and sustainable reasons.

They are having a significant impact, however, on the cost individuals have to pay in rent or purchase price. The Department needs to continually review the costs contributing to the cost of housing and reduce them where possible.

Malcolm Noonan (Carlow-Kilkenny, Green Party)
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The residential construction cost study report to which the Deputy referred, which was a Housing for All action, considered a comparative analysis between a number of European comparator countries, including Denmark, Germany, the Netherlands and the United Kingdom. It focused on specific cities: Copenhagen, Berlin, Utrecht and Birmingham. As the Deputy rightly stated, the analysis provided useful information on cost disparities. In Birmingham, for example, the cost is 21% to 29% lower than that of a typical house built in Dublin but in addition, houses of 93 sq. m were common there whereas houses in Dublin are typically larger, at 110 sq. m, in terms of the requirements here. There are other elements relating to costs in other locations being 30% lower. Apartments in those locations were not finished, for example. They were finished with exposed concrete slab and without fitted kitchens, light fittings or fitted wardrobes. There is a significant difference between the finish standards of what was being constructed in other European countries compared with those in Ireland.

Paul McAuliffe (Dublin North West, Fianna Fail)
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I thank the Minister of State for discussing the report. There is much to learn from it. In Dublin city in particular, a clear planning decision has been made that apartments will be the predominant mode. Planners are dictating that. It is for good environmental reasons but the reality is that, as we all know, apartments are significantly more expensive to build and we have to consider how we will provide a city that has affordable housing. The Government has already acknowledged that by providing up to €100,000 or €150,000 in the council-led affordable purchase scheme or the shared equity scheme, for example. All these schemes are, in effect, subsidising the cost of housing. We are in a tricky situation. The cost of constructing homes is well in excess of what those people can pay and seems to be in excess of what the people and the Government combined can pay. We have to consider the cost implications of environmental decisions and achieve balance in that regard.

Malcolm Noonan (Carlow-Kilkenny, Green Party)
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The Deputy makes valid points. The report provided a set of recommendations that could help in developing standardised approaches to the design of housing for wider application, informing policy and encouraging simplified layouts and delivering training awareness programmes relating to the cost impact of materials and finishes commonly used in the residential construction sector. It addressed the development of standardised design specifications for student accommodation and part of the commitment from Housing for All to achieve a significant increase in the use of modern methods of construction in many of these developments and recommended a review of external wall build-ups to assess and test alternatives, including external leaf for Irish climatic conditions, for suitability. There are several good recommendations there along with the other measures we have in terms of development contributions that we hope will reduce that cost over time.

Fergus O'Dowd (Louth, Fine Gael)
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May I ask a supplementary question?

Catherine Connolly (Galway West, Independent)
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Not really. The Minister of State has concluded his reply. The Deputy may come in with a supplementary question on any other question.

Fergus O'Dowd (Louth, Fine Gael)
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I certainly will. I thank the Leas-Cheann Comhairle for the courtesy.