We are being told that the demand for new housing units in Ireland is 25,000 per year.
Is that figure accurate? Is that the correct figure or could it be higher or lower than that?
The 2016 census tells us that between 2011 and 2016 the population grew by 165,000 or 0.7% per year.
It also tells us that the average household size between 2011 and 2016 rose from 2.73 to 2.75, but we also know from census figures that between 1971 and 2011 it fell from 4.7 to 2.7, so what is going on here?
Well, we know that the European average is 2.3 per household and softening, so why is the trend in Ireland heading in the opposite direction?
The obvious answer is that when the Irish economy went over the cliff in late 2008, building of new housing units stopped dead, finance for the purchase of new housing units ceased and anyone who was lucky enough to still have a job had their wages severely cut.
So not alone did the production of houses stop but even if they were being produced, no one could afford one and the finance just simply was not available. So, the people who through the natural process would leave home, get a job, save and buy a house, were now stuck and had to stay at home with Mom and Dad well in to their 30s. This meant that, rather than follow the trend in the rest of Europe like we had been doing for decades, our trajectory was now in the opposite direction. In reality, this is the pent up demand for houses which has built up over the past nine years.
We have a population of 4.5m so at the 2.75 people per household that we were at in 2016 we have a housing stock of approximately 1,636,000. If that people per household figure was 2.3, like it is in the rest of Europe, which is where it should be, the housing stock should be 1,957,000 or an extra 320,000 housing units and that’s just to bring us back to equilibrium.
Then add the fact that our population is growing at a rate of 0.7% per annum.
We need 10,000 housing units built every year to cater for obsolescence, plus 14,350 per year to cater for population growth. So now the total deficit for the coming year will be 345,000 housing units.
If we try to get back to equilibrium within the next, say eight years, we will have to build 43,125 new housing units per year!!! That’s without us experiencing a further population growth as a result of inward migration.
So now, let’s re-ask the question; “is the real demand for new housing units in Ireland running at 25,000 units per year?