Construction has begun on 50, two bedroom homes which will be rented at a discounted rate of 1,200 euro a month.
The cost price houses in Stepaside in Dublin will be made available to people earning under 50,000 euro a year or 75,000 for couples.
The State funded housing development also plans to build 105 social homes.
Minister for Housing, Eoghan Murphy says the Government needs to help to bridge the affordability gap. "what cost rental is essentially its the paying of below-market rents and those rents staying below the market for the duration of that tenancy so that your rent is going to cover the cost of construction and management and nothing else - what we're seeing at the moment is a large increase in the construction of new homes but what we've recognised from other cities is that unless the government steps in to bridge the affordability gap young couples aren't going to afford to rent near where they work and that's why cost rental is so important."