06 Nov 2014
In the following article by Ronan Lyons “Dublin: An enclave for the wealthy?” in the Village magazine, the author attempts to quantify current development standards for residential development in Dublin, and asks if these standards, more onerous than other parts of the country, are pushing affordability further away from ordinary home owners.
The cost impacts may be a contributing factor to lower planning applications for residential Developments in Dublin.
“So the final price, which includes VAT, of a two-bedroom unit in Dublin is currently €460,000, as opposed to €345,000 if the standards that apply elsewhere in Ireland applied in central Dublin. Translating this into the monthly rent required for a two-bed to be viable for an investor to buy (at a 6% yield) and thus for a developer to build in the first place, the rent for a Dublin two-bed would need to be €2,750 per month. Under DOE standards, the rent would need to be €2,050. Rents for two-beds in Dublin currently range from €1,150 in Dublin 9 to €1,650 in Dublin 4. What sort of income would you need to have to pay €2,750 a month on your rent?
…Accepted financial wisdom is that the highest fraction of your income to spend on housing that is sustainable is 35% of your disposable monthly income. A professional couple earning €120,000 gross per annum should not be spending more than €2,250 on housing costs per month. To afford a DCC-standard two-bedroom apartment, with its two balconies, its lift and basement car parking space, you would need to be earning €140,000 a year. Is it any
wonder that nothing has been built in Dublin in the last few years? DCC’s regulations are effectively turning Dublin – or certainly its new developments – into an enclave for the wealthy.”
We note the author may not have factored the recent additional costs of the proposed 10% social housing requirement introduced in the recent budget, or increased costs due to BC(A)R SI.9. Quote:
“The problem is that, in the rush to prevent another Priory Hall from happening again, the government is making the mistake of thinking that lots of regulation is an adequate substitute for effective regulation. Something like Priory Hall should never have happened – where the system failed was not that it didn’t regulate against it.`”
“The problem was that existing regulation was not enforced.”
Other posts of interest: