Is Ireland's housing crisis a myth?

[schmittel]

Just an uneducated passing thought - is there a fairly large, elderly/middle aged, single -occupancy demographic in Dublin?

I'm not sure to be honest but if so it is baked into the average house size. I take it you mean there is an outsized empty nester demographic? Old folk living in 3/4 bed houses?

Undoubtedly some of that going on, but if that is the explanation for these figures then it simply underscores the point that the problem is not that we do not have enough houses, but that we are using the existing stock highly inefficiently.

In any event the explanation still does not fit the anecdotes and the headlines. Consider both these statements:

a) housing supply is currently so tight that record numbers of adult children are living with their parents

and

b) housing supply is currently so tight because we have record numbers of empty nesters

Can both statements be simultaneously true?

[isha]

I was thinking more an out-sized empty-nester demographic.
I could be completely wrong on that.

I think both statements a and b can be true - just they are different but not overlapping demographics.
However, I must say i also shudder at the idea that politickers might latch onto the idea that the existing stock is being used highly inefficiently by empty nesters. From that could spring terrible things. Nonetheless I have seen some small hints (albeit my glances at current affairs are fragmentary) that the present policy makers do see evidence of such ''inefficient use'' - hence initiatives like subsidised or low tax rent a room schemes.

[Hairy-Joe]

Possibly Isha and I'm wondering if it could be related to the dropoff in intergenerational housing (eg elderly parents living /being looked after by their adult children)?

[schmittel]

I was thinking more an out-sized empty-nester demographic.
I could be completely wrong on that.

I think both statements a and b can be true - just they are different but not overlapping demographics.
However, I must say i also shudder at the idea that politickers might latch onto the idea that the existing stock is being used highly inefficiently by empty nesters. From that could spring terrible things. Nonetheless I have seen some small hints (albeit my glances at current affairs are fragmentary) that the present policy makers do see evidence of such ''inefficient use'' - hence initiatives like subsidised or low tax rent a room schemes.

Fair enough, they may not be overlapping - i.e the elderly living alone either have no children or their children's accommodations needs are already met.

In that case then a) and b) can only be true if we have enough physical housing stock to accommodate both demographics, which we currently do according to the data.

So the problem is that there are no houses for the adult children living with their parents?

Whilst undoubtedly a huge issue for those affected by it, this is essentially a short term problem and not one that can only be solved by building 50k houses a year for the next ten years as the talking heads would have you believe.

If we build 50k houses a year into this market and demographic inevitably we will end up with an enormous oversupply because when the elderly living alone pass away as there is no demand for their houses from the next generation.

I am not saying we don't need to build anything, but the idea that the problem can only be solved by building quickly at scale is wrong.

The problem needs to be solved by increasing the turnover of the existing stock rather than adding huge quantities to it.

Turnover has been at record lows for about 15 years, and I believe this is the root of the problem, yet you never hear anybody even mention it let alone suggest policies to improve it.

[KHD]

Could be all the bachelor farmers skewing the results.

[isha]

How does the existing housing stock turnover get increased? Only asking because I don't know.

[schmittel]

How does the existing housing stock turnover get increased? Only asking because I don't know.

Like treating an alcoholic - first step is to acknowledge the problem! Then basically do the complete opposite of everything the government has been doing for the past 10+ years.

Turnover is obviously people buying and selling houses to each other, essentially people who need a bigger house buying from people who need a smaller house, and vice versa. In a functioning market with a healthy turnover rate this ensures the efficient allocation of resources.

Each transaction has a knock on effect, here's a very simple example: Joe who lives in a rental, buys a starter home from Jane - Joe vacates a rental property and provides funds for Jane to buy a house for her growing family, Jane buys a family home from Jack and Jill who are empty nesters, vacating a family home for Jane and they decide to rent Joe's old house. Or buy a smaller house from somebody like Jane. And so on and so forth. The property market is like a giant game of musical chairs.

The problem in Ireland is the music stopped, and has never really got going again so everybody is stuck in their chair finding it difficult to move. The biggest issue is that not enough people are selling 2nd hand homes rather than we are not building enough new homes.

I think one of the biggest causes of this goes back to how we dealt with the huge level of mortgage arrears after the crash. By basically adopting a policy of extend and pretend, doing anything other than repossessing the properties, we have created a situation whereby a huge volume of houses are just stuck. We have removed them from the market because the owners cannot sell now even if they want to. The arrears/warehoused debt/restructuring means they still cannot clear enough from the property to fund a move, so they just stay put. 

These are the Janes in the simple example above. They are not selling so there is less for Joe to buy, and there is less for Jack and Jill to buy, so they don't sell. And so on and so forth compounding the problem.

To unclog the market we need to tackle this, as unpalatable as it might be. But of course the longer we leave it, the harder it is to deal with it.
There are a raft of other smaller measures that would help - eg vacancy tax - but none will have much of an impact without tackling the arrears properties.

[schmittel]

We can also do the same calculation for Dublin 2032 with a few assumptions:

We build 35k (current government target) houses per annum until 2032 nationwide.
Dublin retains the same proportion of those 35k per annum.
Population growth from 2016 - 2022 remains constant from 2022 - 2032.

Last year Dublin housing stock increased by 12,288 out of 34,198 increase nationwide = 36% of new builds or 12,600 per annum.

12,600 x 10 = 126,000 increase in housing stock by 2032, making total housing stock of 571,280 + 126,000 = 697,280

From 2016 - 2022 Dublin population grew from 1,347,359 to 1,450,701, an increase of 103,342 - 17,223 per annum.
17,223 x 10 = 172,223. Population in 2032 = 1,450,701 + 172,223 = 1,622,924

Then the 2032 calculation is Housing stock of 697,280 x average household size 2.73 = total housing capacity = 1,903,574
And a population of 1,622,924
Spare capacity is for 280,650 people or 102,802 units (280,650/2.73).

Base rate required spare capacity is 41,836 (6% of 697,280)
Oversupply in 2032 is 102,802 - 41,836 = 60,966

To put that 61k figure in perspective it is almost 4 times higher than the equivalent calculation of oversupply in Dublin using 2011 figures. And back then the talking heads narrative was that it would take decades to mop up the excess. And obviously prices had reacted accordingly.

Bear in mind the above assumptions are based on maintaining record population growth. It seems more likely that in reality a combination of economic and demographic factors over decade will hinder maintaining that rate of growth.

In reality the market would be more likely to correct significantly before oversupply reached anything like 4 times as high as 2011.

But if the market corrects to reflect the fact that we didn't need to build anything close to 35k houses per annum, how do you explain that to the poor sod who bought a house in 2022 with a 30 year mortgage for 425k confident it was a financially sound move because everybody said we didn't have enough houses?

[Hairy-Joe]

Schmittel, I don't know enough to critique your assumptions but at a quick glance, they make sense. I'm afraid your sums don't fit the narrative pushed by some political parties and the media.....

I know talking to some elderly friends, it's the complete lack of decent assisted living that's stopping them downsizing. There's a lot of grand houses with only one or two elderly people living in them.

Another problem is there's a LOT of young people who want to buy new houses only and don't want the work of an older house.

[schmittel]

Schmittel, I don't know enough to critique your assumptions but at a quick glance, they make sense. I'm afraid your sums don't fit the narrative pushed by some political parties and the media.....

I know talking to some elderly friends, it's the complete lack of decent assisted living that's stopping them downsizing. There's a lot of grand houses with only one or two elderly people living in them.

Another problem is there's a LOT of young people who want to buy new houses only and don't want the work of an older house.

I'm yet to find anybody who says the figures don't intuitively make sense. But strangely I am also yet to find anybody who agrees with me that if you ignore all the headlines and soundbites, and just look at the data you would conclude that Ireland has no shortage of housing stock.

I agree with your point on elderlies, if I was Minister I'd be focussing resources on elderly friendly housing, not entirely assisted living, though some of that too. Just more accessible stuff. We desperately need more supply to entice elderlies to downsize. And I stress entice. I am fervently against any sort of measures to push them out of their houses.

On the young wanting to buy brand new homes, I'd agree that's a thing. But I am not sure if it is more because that's basically all that's available. The quality of a lot of the second hand stock is pretty dire, that's probably down to low turnover too. Plus their HTB grant is only available for new builds. Another moronic policy.

I also think its related to another problem with young people's needs - nowadays they seem to want to buy a "forever home" right off the bat as FTBs. The idea of the property ladder seems to be outdated. Again I think this is a hangover from 08 crash/low turnover.

[Hairy-Joe]

That's interesting. I never thought that people want to get their forever home straight away. Now that you've said it, I can see it with younger colleagues. Also, the younger people want it perfect from the start. I remember telling some of them the work I had to do to my first home and how long it took (as I couldn't afford it all straight away). I got looks of horror and plenty of comments that they couldn't dream of not having it right from the start.

Well, I can give an example of my neighbour. He's living in a lovely 4 house on the side of the road. It was built in the late '80''s with no expense spared. If you saw him, you'd think he's in his mid 60's. He walks 6 km every day and is still working as a consultant engineer. A few years ago (after a bit of knee trouble restricted his movement and couldn't drive) he looked at downsizing and get a smaller house in town. The logic was that he would have less work keeping the place, closer to shops, services, etc.

Well, a few years later, he's still rattling around his 4 bed house, pottering around his garden.

[schmittel]

That's interesting. I never thought that people want to get their forever home straight away. Now that you've said it, I can see it with younger colleagues. Also, the younger people want it perfect from the start. I remember telling some of them the work I had to do to my first home and how long it took (as I couldn't afford it all straight away). I got looks of horror and plenty of comments that they couldn't dream of not having it right from the start.

Well, I can give an example of my neighbour. He's living in a lovely 4 house on the side of the road. It was built in the late '80''s with no expense spared. If you saw him, you'd think he's in his mid 60's. He walks 6 km every day and is still working as a consultant engineer. A few years ago (after a bit of knee trouble restricted his movement and couldn't drive) he looked at downsizing and get a smaller house in town. The logic was that he would have less work keeping the place, closer to shops, services, etc.

Well, a few years later, he's still rattling around his 4 bed house, pottering around his garden.

Fair play to your neighbour I say, it's not his fault there is nothing available for him to buy.

And even if there was something for him to buy the complexities involved in trying to time a sale and purchase so you move from one to other as seamlessly impossible is not appealing for anybody, let alone the elderly. The alternative is to sell, rent and then buy. Good luck with finding something to rent.

Another policy I'd like to see introduced is bridging finance for downsizers. So people like your neighbour can buy a smaller house, take their time about the purchase and then move, and then when they're ready, sell the old house.

And if your neighbour has just decided he doesn't want to move and says get your beady eyes off my spare bedrooms, you'll have to bring me out of here in a box, that's fine with me too!

(Assuming he has paid for/is paying for the house that is!)

[schmittel]

After a bit more reading on this it is clear that the demand forecast is based on the assumption that average household size will decline over the next decade, to something closer in line to the European average - 2.3.

That would make the current targets for Dublin look at lot more realistic, but still leaves the rest of the country awash with an oversupply.

[marhay70]

Fair play to your neighbour I say, it's not his fault there is nothing available for him to buy.

And even if there was something for him to buy the complexities involved in trying to time a sale and purchase so you move from one to other as seamlessly impossible is not appealing for anybody, let alone the elderly. The alternative is to sell, rent and then buy. Good luck with finding something to rent.

Another policy I'd like to see introduced is bridging finance for downsizers. So people like your neighbour can buy a smaller house, take their time about the purchase and then move, and then when they're ready, sell the old house.

And if your neighbour has just decided he doesn't want to move and says get your beady eyes off my spare bedrooms, you'll have to bring me out of here in a box, that's fine with me too!

(Assuming he has paid for/is paying for the house that is!)

Or he could be like me. I considered downsizing a couple of years ago as the place is a bit big for just the two of us and I always worry that if I pop my clogs, herself wouldn't be able to manage it, we have no family within 100 km. I looked around for something smaller but couldn't find anything and then I looked at all the stuff I have accumulated over the years and said, fcuk ii, I'd be forced to get rid of most of it and then, without it I wouldnt be able to potter and mullick as I like and the boredom would probably kill me anyway. So, here I am.

[Hairy-Joe]

Or he could be like me. I considered downsizing a couple of years ago as the place is a bit big for just the two of us and I always worry that if I pop my clogs, herself wouldn't be able to manage it, we have no family within 100 km. I looked around for something smaller but couldn't find anything and then I looked at all the stuff I have accumulated over the years and said, fcuk ii, I'd be forced to get rid of most of it and then, without it I wouldnt be able to potter and mullick as I like and the boredom would probably kill me anyway. So, here I am.

My elderly father is the same. If he didn't have "things" to do, he'd probably die of boredom. He would fold a goat if you suggested downsizing.....

That being said, I still get called for the jobs he's physically not able to do and anything he does, he takes a lot longer to do (on purpose)

[marhay70]

My elderly father is the same. If he didn't have "things" to do, he'd probably die of boredom. He would fold a goat if you suggested downsizing.....

That being said, I still get called for the jobs he's physically not able to do and anything he does, he takes a lot longer to do (on purpose)

Yep, sounds a lot like me. Things that I would have taken on without thinking a few years ago need to be planned and thought about now. It's a case of matter over mind, rather than the reverse, I think I can do it until I start. The missus says every time she goes out she expects to find me in a heap when she gets back. It's hard to change the habits of a lifetime.

[Hairy-Joe]

Just heard on the radio that Minister O'Brien wans to give tax breaks for fridges to get landlords to stay. Deck chair ok the Titanic comes to mind....

[Cyclepath]

[quote=schmittel post_id=39183 time=1670599339 user_id=114
But if the market corrects to reflect the fact that we didn't need to build anything close to 35k houses per annum, how do you explain that to the poor sod who bought a house in 2022 with a 30 year mortgage for 425k confident it was a financially sound move because everybody said we didn't have enough houses?
[/quote]

I think the problem is more nuanced than a set of figures tbh. When we do these calculations we also need to consider the following:

Salary/house price ratio - at one time a single income family could reasonably expect to buy their own house; not now and it's only getting worse due to real-world salary deflation.
Vulture funds manipulating the market - rents are spiralling not only due to supply Vs demand. These C**ts are actively manipulating the market and have a long term interest in maintaining the shortage.
Quality of existing housing stock - more and more houses are failing to meet buyer expectation and require either rebuilding or extensive remedial work to meet energy standards
Longer lifespans - in a relatively short time, there has been a significant extension to average lifespans. Those house aren't turning over as fast as we'd expect.
Social housing - there is a shortage of homes for those that can never afford one. We have to face the fact that private industry will never care about or meet the demands of the social contract. You either subscribe to this or not, but I definitely don't want to live in a society that doesn't.
Lack of hybrid solutions - other nordic countries actively encourage non-profit and co-op schemes to build homes by removing the bureaucracy/obstacles and giving grants and preference to these schemes. There's no law that says we have to provide private developers with unlimited opportunity.

All of the current useless tinkering is just that and I certainly don't believe that the current government will meet the housing needs for the country. Neither do I believe that developers will cut their own throats by oversupplying the market. That's the job of government - a sufficient supply of social housing regulates the market by removing the heat and desperation for accommodation at any cost.

[DeletedUser]

There's one main reason - too many fking people with their hands out and never once contributing - both our oun multigenerational wasters and those fresh off the back of a lorry at Wexford Harbour.

[kadman]

That the government can provide a solution to the housing crisis is the myth in question. WE will end up with celtic tiger no 3, along with all the most incorrectly built accomodation that this country has ever seen. It has gotten progressively worse since the last building boom, and continues to do so. We need a radical over haul of the existing construction industry, with particular emphasis on inspection and enforcement. Until that happens we will continue to build sub standard housing, and both domestic and commercial properties.
Its not really about the lack of housing..its about the lack of inspection and proper regulation that prevents us from entering the spiral of building badly constructed buildings, redress schemes , repair....rinse and repeat. Somebody has to stop this gravy train.

[Hairy-Joe]

I was listening to the interview with Rosin Shorthall on Radio 1. She was talking about the housing crisis. It was put to her why she was objecting to housing developments and at the same time saying we need more houses. "Leopards ate my face" came to mind as it was "the wrong types of houses". Feck sake, anything is better than nothing and its a private development so if it's the wrong type, it won't be sold. Also, we need ALL types of houses.

God, when that's the caliber of opposition politicians.....

Edit - An example of the stupidity was she wanted "good quality 3/4 bed affordable house" in a low-rise development in the middle of Dublin. Now, the stupidity of that statement, an affordable 3/4bed house in the middle of Dublin!

[Jack The Stripper]

Three Ukrainian families got new council houses there in a new estate there in the next town. Same community there are people on housing waiting lists for over a decade.
Second class citizens now the Irish are. Fill the country up and make the Irish a minority. It’s like a modern day Ulster plantation.

[kadman]

Three Ukrainian families got new council houses there in a new estate there in the next town. Same community there are people on housing waiting lists for over a decade.
Second class citizens now the Irish are. Fill the country up and make the Irish a minority. It’s like a modern day Ulster plantation.

I think its a sentiment thats slowly growing , and the government should take heed and deal with it in a positive manner.
There was always a long, long wait for housing down through the years, where the government ignored the problem that increased year on year. Now that the influx of people for many different reasons has exacerbated the issue...........................the government seem unable to cope.

If they cant do the job, then they shouldn't be in it.

[schmittel]

I was listening to the interview with Rosin Shorthall on Radio 1. She was talking about the housing crisis. It was put to her why she was objecting to housing developments and at the same time saying we need more houses. "Leopards ate my face" came to mind as it was "the wrong types of houses". Feck sake, anything is better than nothing and its a private development so if it's the wrong type, it won't be sold. Also, we need ALL types of houses.

God, when that's the caliber of opposition politicians.....

Edit - An example of the stupidity was she wanted "good quality 3/4 bed affordable house" in a low-rise development in the middle of Dublin. Now, the stupidity of that statement, an affordable 3/4bed house in the middle of Dublin!

It's amazing how many of these half wits think that it's only 3/4 bed houses that are the right types of houses. We already have stacks of them.

The whole we need to build 40k/50k/60k properties a year is built on the idea that our average household size - currently 2.75 - will converge with the European average - currently about 2.0.

The reason our household size is so much larger is because we have a much higher proportion of 3/4 bed houses making up our housing stock.

If we're really heading to converge with the European average what we need is more 1/2 bed apartments. But nobody wants to buy them. (Except investment funds making a fortune renting them out to people who want to buy 3/4 bed houses)

These geniuses who reckon we need to build 60k 3/4 bed houses per annum because we are going to have an average household size of 2 people really haven't thought the maths through.

[Del.Monte]

By the time all these houses etc. are built there won't a field left to grow food to sustain the population.