Sunday, February 21, 2021

Key Irish housing statistics 1971-2020

After the British Brexit vote in 2016 Irish government ministers, politicians, big professional firms (law and accountancy) and property journalists salivated on the opportunity of attracting thousands of bankers from London. Ministers wanted Ireland to be given the UK-based EU agencies (neither came to pass).

Ireland's population continued to rise at a rapid pace while the recovery from the 2008/2009 property crash was evident in housing completions at the lowest levels since Ireland's independence in 1922.

It was a classic “either feast or fast,” which appeared in Thomas Fuller's 'Gnomologia '(1732), while "fast' was later substituted by "famine."

In the past decade, Dublin's population continued to outpace the supply of housing and it has been common also in other capital cities.

The 2020 H2 Daft Wealth Report noted that there was a daily rise of €50m on the total value of Irish residential property which at the end of 2019 was valued at €586bn. The two lowest markets were Bundoran, Co Donegal at €91,000, followed by Castlereagh, Co Roscommon at €96,000. South Dublin was at the other extreme with average asking prices in Mount Merrion, Dalkey and Sandycove at €820,000, €765,000k and €746,000 respectively.

Amsterdam's property prices rocketed 45% between 2016 and 2018 and city surveys found that in Paris, Stockholm, Helsinki, Amsterdam, Copenhagen, Luxembourg, Berlin, London and Dublin, more than 80% of citizens said that it was difficult to find good housing at a reasonable price.

Economists at Germany's Deutsche Bank noted in 2020, "Even though a situation in which demand remains unsatisfied over a period of several years may only have limited market relevance, we still believe that there is a shortage of over 1m units over the cycle as a whole since 2009." However, the German Economic Institute (IW) in Cologne suggested in 2019 that there were almost 2m vacant apartments in Germany!

Destatis, the German federal statistics office, reported in respect of 2019, "There were 511 dwellings per 1,000 inhabitants at the end of 2019, which was an increase of 16 dwellings per 1,000 inhabitants compared with 9 years earlier." The comparable Irish figure was 413 in 2020. (see chart below).

At a global scale, according to the OECD from 2000, "the majority of metropolitan area population growth took place in large and very large metropolitan areas, regardless of whether countries experienced rapid population growth or population decline.

Migrants, as well as locals, gravitate towards capital cities and Dublin is among the EU cities with the lowest median (midpoint where 50% are above and 50% below) age.

In 2020 Greater Vienna had a population of 1.911m and 31% were foreign-born. The population has grown by 13% since 2010 and by 10% in Dublin and suburbs in the period 2011-2020, to 1.288m.

The population of the core City of Copenhagen grew by 18% in the last decade.

European countries cut back on affordable housing during the last recession while in the recovery pay rises for many workers have not kept pace with house prices and rents. In addition, the bank overlending up to 2008 has been followed with stricter lending rules from central banks.

High and rising rent prices make it more difficult for tenants to save up for a down payment to purchase a home.

People who have an older mortgage benefit from historic low-interest rates.

Source: OECD Analytical House Price Database

What should Ireland do?

Census 2016 showed that more owner-occupiers owned their homes outright than people who had mortgages.

In 2019 37% were outright owners in Ireland compared with 8% in The Netherlands and 14% in Denmark. Owners in the latter two countries tend to pay off the outstanding mortgage debt from their generous pension pots while in Ireland two-thirds of private-sector workers do not have adequate occupational pensions or none at all.

The overall number of dwellings in relation to the population is highest (above 500) in Portugal, Bulgaria, Finland, France, Latvia, Spain, Germany and Denmark, and is the lowest in New Zealand at 383 per 1,000 population.

Including the property bubble, Ireland has never come close to 500.

1) In coming years Ireland will have to allocate significant expenditures on affordable housing, health reform, and climate change measures. There will be no confetti money from European Central Bank helicopters and taxes will have to rise;

2) Major reforms to cut building land costs; planning reforms to get quality apartments built in Dublin and both mid-rise and high-rise building where appropriate, are necessary:

3) Social housing should be provided by non-profit associations backed by the Government, similar to the Danish and Dutch models.

The sale of social housing should be ended;

4) Rampant Nimbyism must be tackled;

5) In the past 50 years the rate of vacant houses excluding holiday homes has been about 10% of the stock. There could be an opportunity to raise taxes here?;

6) Rental regulation should ensure the security of tenure as applies in countries such as Germany and The Netherlands. "Housing is the most important institutional property asset type in Switzerland and the Netherlands, comprising over 52% and 50% of their institutional property portfolios, respectively. In Sweden residential property plays an important, but not dominant role in the domestic institutional property portfolios, representing about 21% of the institutional property holdings."

POPULATION AND EMPLOYMENT: At the end of 2020 the Irish population was about 5.035m.

The total number of persons in the Irish labour force in the fourth quarter of 2019 (pre-Covid) was 2,471,700, representing an increase of 61,600 (+2.6%) over the year. There were 391,300 non-Irish nationals.

There were about 350,000 jobs losses in the 2008-2011 recession. Of the 498,000 jobs created between Q1 2012 and Q4 2019, 440,000 were full-time positions according to the CSO. 

In the two years, 2018/2019 (Eurostat population data relate to January 1 in the succeeding year) the net rise in the Irish population was 134,000.

House completions in the decade 2011-2020 amounted to 113,126.

In the period 2011-2019, the EU27 (ex-UK) population grew by 1.9% while Ireland's population expanded by 8.6%.

In the period 1960-2019 the EU27 population rose by 26% compared with Ireland's 76% in the period 1961-2019.

In 1971, over 880,00 people (31% of the total population) lived in households of seven persons or more.

The average household size fell from 4.1 persons in 1971 to 2.6 in 2019. Sweden was at 1.8; Germany, Denmark and Finland 2.0; while the EU27 average in 2019 was 2.3.

In 2010-2019, the total number of households in the EU increased by 7.0% while single adult households without children grew +18.7%.

According to Eurostat in 2019, children lived in fewer than one in four households in Sweden, Germany and Finland.

Germany and Finland recorded the highest proportion of households without children (78%), ahead of Sweden (77%), Austria (75%) and Bulgaria (74%).

In contrast, the highest proportion of households with children was registered in Ireland (39%), followed by Poland, Cyprus and Slovakia (all 36%) and Romania (35%).

In Ireland, the single adult rate household is 27% in 2019 (partly because of ageing) compared with 14% in 1971.

HOMEOWNERSHIP: In 1971 Ireland was the poorest country in Western Europe and it had one of the highest homeownership rates.

The homeownership rate was 71% in 1971 up from 52% in 1946. It compared with Sweden's rate of 35% and Britain's rate of 50%.

Ireland's rate peaked at 80% in 1991 when Spain had a rate of 78%; The Netherlands was at 47%; Denmark at 51%.

In 2019 both Ireland and The Netherlands had a 69% rate while the EU27 average was 70%. The former communist countries of Eastern Europe have high ownership rates as housing was privatised following the collapse of the Soviet Empire. Denmark was at 61% and Spain was at 76%.

The German-speaking countries have the lowest rates of homeownership combined with regulated rental sectors: Germany's rate in 2019 was 51%; Austria 55% and Switzerland 42%.

Homeownership has been promoted by European politicians of the left and right for several decades.

The so-called Golden Age of economic growth in Western Europe in 1950-1973 provided funds for residential building, subsidies and tax breaks.

In Ireland, the 1948-1951 coalition government began a programme of building and while there were economic problems from 1952, a United Nation's report put Ireland first for public housing subsidies among 15 European countries.

In the 1960s subsidies and tax breaks provided buyers of new Irish houses a discount of about 30%.

In the mid-1980s with public debt at 150% of GDP, unemployment at 17% coupled with a resumption of high emigration, the housing expenditures began to be trimmed.

In 2004 Brian Cowen, finance minister, disclosed that 28% of the price of a typical new house comprised VAT (Value Added Tax) and public levies.

Prof Michelle Norris, UCD 2013: Varieties of homeownership: Ireland’s transition from a socialised to a marketised policy regime

SOCIAL HOUSING: The exceptional Irish model began in the 1930s when cottage tenants in rural areas were given a right to purchase. It was later extended to the whole country.

Prof Norris and Dr Aideen Hayden of UCD in a 2018 report for the philanthropic group Community Foundation for Ireland said that two-thirds of all council housing is now privately owned after being bought through the tenant-purchase scheme. They called for its suspension; the removal of successor tenancies and the construction of smaller council housing units so tenants can downsize after their children have grown up.

In the 1960s and 1970s, one-third of all house completions were council houses.

The authors said:

"36,051 council houses were sold to tenants between 1990 and 2016, which is 43% of the total 82,869 council houses built during this period. It also reveals that the rate of sales varied significantly over these years. Sales were much higher in the 1990s (when they averaged 2,308 per year and almost counterbalanced new council housing output during this period) than in the 2000s (when they averaged 1,425 dwellings per year, but for most of this period council housing output was much higher). Sales also fell significantly after the 2007-08 financial crisis and, to date, have failed to regain their previous highs."

The discount on market value is up to 60% but politicians of all parties would be reluctant to scrap the incentive.

However, while more social housing is required, at the same time selling off stock is a crazy policy.

Norris and Hayden recommended adopting a European model for social housing funding rather than depending on the central government, which during the last recession drastically curtailed funding.

Buying from private developers rather than local authorities building themselves has been a recent feature of Irish social housing, and an alternative to housing people on low incomes, on council estates.

The authors said "Since the 1980s governments have relied increasingly on other sources of housing for low-income households. These include: not-for-profit sector approved housing bodies (AHBs) and government subsidies for private rented housing such as Rent Supplement and Housing Assistance Payment (HAP)."

Statistics issued by the Department of Housing last month show that there were 8,200 people, including dependents, homeless in December 2020.

Denmark has more than 700 housing associations that are independent of the government but they get government guarantees and over time they fund new construction and refurbishment from their own income.

OECD 2020: Social housing: A key part of past and future housing policyp;

BUILDING LAND: Ireland never produced a development land price index. Wonder why? It cannot be that it would be very challenging to maintain.

The Local Government (Planning and Development) Act, 1963 was an Irish version of the British Town and Country Planning Act, 1947. The aim of the latter was to develop green belts to contain the development of towns and, especially, metropolises like London. The London Green Belt was first planned in 1935 and eventually covered an area of over 500,000 hectares — 3 times the area of Greater London. It mainly comprises agricultural land and golf courses.

In 2017 the Bagehot columnist of The Economist commented:

"IF ANYTHING deserves the label 'wasteland,' this place does. Pylons and tangles of bramble high as houses tower over a lonely oil drum and a collapsed metal fence. In the distance planes approaching Stansted airport whine; refrigerator units at a nearby food-processing factory hum. Set in the frozen mud is a mosaic of industrial detritus, bits of brick and pipe, beer cans and a discarded condom wrapper. A jaunty yellow arrow informs passers-by that this scraggy parcel of Harlow, in Essex, is a public right-of-way.

Notwithstanding the condom wrapper, there are few signs that locals get any enjoyment from it. Given its good road connections and the chronic shortage of local housing, a sensible jurisdiction would make it available for a couple of blocks of flats, or a few dozen homes with gardens. A study by the local council last year found that protecting it serves no discernible purpose. Developing it would cause Harlow neither to sprawl, nor to annex another town, nor to lose its character. Yet protected this wasteland shall remain; a useless eyesore trapped in the insensitive, crushing grip of London’s green belt."

The Irish planning Act provided for piecemeal rezoning and with no capital gains tax, the average price of serviced land in County Dublin rocketed by 530% in 1963-1971 compared with a rise in consumer prices of 64% in the period.

Nevertheless, in 1974 the average price of new houses in Dublin was similar to the national price and local councils at that time held banks of land that could be released in periods of high demand to counter high land prices.

Instead of piecemeal rezoning why not have rezoning of large tracts of land and a cap on prices?

In 2019 a 26.3-hectare site (65 acres) in West County Dublin got fast-track planning permission for up to 950 homes. Property journalists expected "to see intense competition from developers and investors."

The site was located in Clonburris about 12 km from Dublin City Centre and it had a guiding price of €27.5m — the sale was marketed as an "unrivalled opportunity" by selling agents Savills.

The "unrivalled opportunity" was an artificial restriction that powered the value of the land.

In 2019 the CSO reported that a hectare of arable land in County Dublin was valued at €36,628 giving the Clonburris land an agricultural value of €936,316.

The guide price in effect was 28 times the agricultural value.

The lack of a development land index conceals the history of the site from agricultural land.

CSO data show that 33,274 acres/ 13,470 hectares of agricultural land were sold in 2019 which was 0.27% of the 4.9m hectares of farmland.

Another curious statistic is that Ireland was the only country in the EU to have more farms in 2016 than in 2005. 

The Kenny Report 1973: Followed by 30 years of failed efforts to end the land racket

IRISH WANT HOUSES NOT APARTMENTS: In 2019, 46.0% of people in the EU27 lived in apartments, close to one fifth (18.6%) in semi-detached houses and over one third (34.7%) in detached houses. The highest country shares for apartments were observed in Latvia 66%, Spain 65%, Estonia 61% and Greece 59%.

In 2019 Ireland 92% recorded the highest share of the population living in a house, followed by Croatia and Belgium (both 78%) and the Netherlands 75%.

According to Eurostat, in cities, 72% of the EU population live in an apartment and 28% in a house. In Irish cities, 17% of the population of cities live in apartments, followed by the Dutch at 32%; 67% of the population of French cities live in apartments; 60% in Denmark; 88% in Greece and 83% in Switzerland (not an EU member).

The poor quality of many Irish apartments built in the first decade of the century did not help. There often was insufficient storage space and overall limited space for families.

Today the highest acoustic standards should be applied in Irish apartment construction.

Why can’t we build apartments like the rest of Europe? Dysfunctional land market: The primary cause of this Republic’s housing woes

The highest level of population density in the EU was recorded in the French capital region of Paris, where there were, on average, more than 21,000 persons per km² in 2018. Eurostat says that the administrative boundaries used to delineate each region can have a considerable influence on these results. For example, the French capital region is constrained by the périphérique and hence its area is strictly confined to the centre of Paris, in contrast to most urban regions which include both a city centre and its surrounding (less densely-populated) areas.)

The City of Paris area is 105.4 km² compared with the City of Dublin at 117.8 km².

Dublin City has a density of about 4,915 based on a current estimated population of 580,000. Dublin City and suburbs had 3,677 persons for every square kilometre according to the last census. The County Dublin density was 1,458.

Greater Vienna has an average population density of 4,607 people per km² and the highest density at 27,402 is in Margarten while other central districts are in the range 10,000-20,000.

Some people in Dublin naively advocate for mid-rise developments as in Paris, in preference to high-rise. However, because of the number of houses in the City of Dublin, many of them would have to be bulldozed to make a difference.

Eurostat reported this year that in 2019, almost three-quarters of the population were living in under-occupied dwellings in Malta 72.6%, Cyprus 70.5% and Ireland 69.6%. In Spain, 55.4%, Luxembourg 54.0%, Belgium 53.9% and the Netherlands 53.4% more than half of the population were living in dwellings deemed too large. From 2018 to 2019, the share of the population living in under-occupied dwellings decreased in most of these countries except in Luxembourg which recorded a small rise (+0.3 pp), with the most pronounced drop in Belgium (-4.7 pp).

In contrast, less than 15% of the population were living in dwellings deemed to be too large in Romania 7.7%, Latvia 9.6%, Greece 10.7%, Bulgaria 11.5%, Croatia 12.0%, Slovakia 14.0% and Italy 14.2%.

Among the EU member states, almost half the population in Romania 45.8% were living in overcrowded households in 2019. This was also the case for around two in every five persons in Latvia 42.2%, Bulgaria 41.1%, Croatia 38.5% and Poland 37.6%.

At the opposite end of the scale, the lowest overcrowding rates were recorded in Cyprus 2.2%, Ireland 3.2%, Malta 3.7% and the Netherlands 4.8%.


Ireland's FDI over-dependence and surging population

Irish real house prices up 175% in 50 years, UK +405%, Germany 1968-2016 -1% : However, in Germany’s “big seven” cities — Berlin, Hamburg, Düsseldorf, Cologne, Munich, Frankfurt and Stuttgart — house prices for existing homes rose by 123.7% on average in 2009-2019 according to Deutsche Bank. The lowest rise was 97% in Düsseldorf, while Munich saw the highest jump at 178%. In 2013 the average price of a Berlin home was at €2,526 per sqm, and in 2020 €4,634.

Irish prices rose by about 18% in 2009-2019.

Eurostat's regional handbook 2020: Capital city growth: All the areas with especially high purchasing power are capitals, notably, London, Paris, Brussels, and Oslo. In Central Europe: the Ilfov region surrounding Bucharest has residents'  purchasing power in stark contrast to the rest of Romania.

Pat Kenny challenges plan for nursing home beside his house: Broadcaster claims developers trying to stuff ‘ugly sister’s foot into Cinderella’s slipper.’