The recent rejection by Dublin City councillors of proposals to build new homes at Oscar Traynor Road was a significant setback to efforts to tackle one of the biggest housing challenges this country has ever faced. Not only was the chance lost to get families off the housing list and allow for many more to buy their own home, but the decision would appear to have been made based on ideology and misunderstanding of the facts.
The reaction that followed the decision was sometimes scathing but often, unfortunately, favourable. Many welcomed the rejection of the building of private homes on the site, even though that housing would have added to the social mix of the locality and be delivered in tandem with social and affordable homes. Some observers on these pages went so far as to say that the decision would not even result in a delay in the provision of housing at the location, should the council executive simply decide to build.
This analysis is flawed. So too is much of the commentary on the recent report by the Irish Government Economic Evaluation Service (IGEES), which examined the State’s social housing build programme and which many have used to justify their view that it is cheaper for local authorities to directly build social housing rather than relying on the private sector to do so within their own developments.
IGEES itself admits in its analysis that it has arrived at the comparative cost for public sector direct builds despite a dearth of data and that it “can often be the case that the data is not recorded completely or accurately”. The report also notes that “data from the six local authorities under review . . . included incomplete data entries”, that the six case studies were based on incomplete data and that “paper-based” processes make it difficult to arrive at a complete record of social housing delivery costs
Neither does the IGEES report use comparable public and private models of housing delivery upon which to make an analysis. Higher density and higher cost “regeneration projects” are omitted from the public numbers but included in the average private sector projects.
Even with its flawed approach, IGEES suggests a directly-built local authority house will cost €230,000, while one built by the private sector and ready to have a family move in comes in at a cost €258,000. On the assumption that the €230,000 cost includes VAT – which is not clear- the difference of €28,000 includes the costs of land and finance for the developer. As the State excluded more complex projects, it may well be that if they were included there would be no cost differential at all or that the private sector could deliver homes more cost effectively.
No wonder the analysis comes with the caveat that “the views presented in this paper do not represent the official views of the Department or Minister for Public Expenditure & Reform”.
source; Irishtimes.com
