Ireland housing plan faces apartment shortfall warning

Ireland faces a structural gap between its national housing targets and the physical reality of its planning laws. Cairn Homes, one of the country's largest developers, submitted evidence to the Oireachtas housing committee this week stating the state has little chance of completing 60,000 homes a year without a massive surge in apartment construction. The firm argues that current zoning rules make this shift difficult but necessary to meet the 300,000 unit goal set for 2030.

The government’s housing plan requires annual completions to rise from 36,284 in 2025 to between 50,000 and 60,000. Cairn forecasts that close to 40,000 homes will be built in 2026, with numbers likely to exceed that in 2027. However, the mix of these homes is the critical variable. Last year, only 12,047 of the total completions were apartments. The remaining 24,237 were houses, split between 18,308 new-build estate homes and 5,929 one-off homes.

Michael Stanley, chief executive of Cairn Homes, told the committee that the National Planning Framework limits the state’s ability to deliver detached houses. He calculated that the state can only produce around 25,000 to 30,000 own-door houses annually under current rules. Consequently, the remaining units required to hit the 60,000 target must be apartments. Stanley noted that 85 per cent of zoned land includes density requirements that necessitate apartments in future developments.

The shift to apartment-heavy construction faces financial hurdles. Research from the Department of Housing shows that the cost to build an urban apartment in Dublin rose by more than €13,000 last year to reach €605,000. Suburban apartment prices also increased by 2 per cent to €559,000. Developers argue that these high costs, combined with a lack of viable exit strategies for selling to investors, have made many projects unviable. This financial friction threatens to slow down the delivery of houses as well, since apartments often form part of the same development sequence.

Stanley stated that approximately 50 per cent of all new homes in the future will have to be apartments to comply with planning objectives. He warned that unless the industry builds between 25,000 and 30,000 apartments per year, the total output target of 50,000 to 60,000 homes annually is unlikely to be met. The sector requires state support to make apartment delivery viable while private capital for this category remains limited.

The state has launched the Croí Cónaithe scheme to bridge the gap between construction costs and affordable prices for owner-occupiers. Cairn has already sold more than 350 apartments in its Seven Mills development in Dublin 22 through this program. One-bedroom units in that project sold for between €235,000 and €275,000, while two-bedroom apartments of 79.9 square meters cost around €375,000.