Towns and villages outside Galway City’s catchment are being locked out of affordable housing developments by skyrocketing construction costs.

An Athenry Municipal District meeting heard on Tuesday that discounts provided to prospective buyers in affordable developments were not enough to make them viable – with only commuter towns attracting interest from developers.

John Waters from the Council’s Affordable Housing Team said the affordable housing scheme, as set down by national legislation, wasn’t working in areas where, despite the increasing cost of building, selling prices were lower.

As a result, the Council was struggling to advance the scheme in towns like Loughrea, Ballinasloe and Tuam – and in smaller rural towns and villages.

“Other local authorities don’t seem to be as badly affected by this. None of them have raised it. The model works fine when the [market] price is high, in places like Barna, Athenry, Claregalway and Moycullen.

“The main challenge we face is the cost of building is very high and there is almost no development taking place outside the Metropolitan Area Strategic Plan (MASP) area,” said Mr Waters.

“But in Tuam, Loughrea, Dunmore, Carraroe, where a three-bed might sell for €330,000 or €340,000, the cost of construction is around €370,000,” he said.

Government rules mean that subsidies are fixed, depending on the size of the affordable housing development.

For fewer than 35 units per hectare, €50,000 per unit is the limit; for more than 35 units and fewer than 50, it’s €75,000; and for a density of more than 50 units per hectare, the subsidy is €100,000.

As a result, developments of fewer than 35 units in Galway towns and villages were not viable for affordable housing, said Mr Waters, and the homes would not be 15% lower in cost than the average market value, due to the cost of building.

“It breaks the system,” he said.

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