Sunday, March 28, 2021

European Housing Crisis: Ireland is not alone - Part 1

Every day, about 250 football fields of land in Europe are converted to urban use according to the European Spatial Planning Observation Network (ESPON) which advises the European Commission and one of its possible solutions is that by 2050, all new urbanisation will be in the form of redevelopment, regeneration or infill.

The OECD secretary-general commented last year "Cities around the world are not only growing but have tended to become denser, rather than sprawling. Since 1975, 70% of population growth in cities on average has occurred through densification, which means population has grown within old city borders. This result is rather surprising because the a priori is that cities tend to sprawl out of their historical boundaries."

The Irish urbanisation rate at 63% is the lowest of the 36 member countries of the OECD.

Before the start of the pandemic in 2020, one in ten Europeans were spending more than 40% of their income on housing. However, in 2019 households in the median OECD (mainly advanced economies) country were spending 19% of expenditures on housing costs.

The Great Recession resulted in cutbacks on social housing spending and in the past decade there has been a rise in the populations of several capitals and leading commercial cities such as Amsterdam and Munich, in particular with digital transformation services attracting young locals and migrants.

Part 2 will focus on housing size and living floor size per person

Historically low-interest rates are also a factor in house price inflation. Housing in Sweden cost 15% more in February 2021, on average than a year earlier.

The Financial Times quoted Lucy Pendleton, property expert at independent estate agents James Pendleton, as saying in March that “so many people still want to move for more space” that upward pressure on prices will remain strong throughout 2021.

The population of the City of Copenhagen grew by 20% in the past decade; Amsterdam and Stockholm by 15%; Vienna 13%; Brussels Capital Region and Munich 11%; Berlin 6%; Madrid was stable at 3.3m but Greater Madrid grew 13% while Greater Barcelona gained 14%.

The City of Paris remained stable but Île-de-France (Greater Paris) grew 4% to 12.3m.

The Irish capital city has a land area of 117.8km² compared with the City of Paris at 105.4km². The French capital has a population of 2.2m and Dublin's is above half a million. The latter grew by an estimated 10%.

The Paris density is almost 21,000 people per square kilometre while Dublin is at about 4,880 in 2021.

The ratio of apartments/ flats to houses in Dublin is 35/65%. Paris is at 99/1% and Île-de-France 72/28%.

The cities of Stockholm and  Amsterdam each have an 86/14% ratio and Madrid is at 96/4%. Vienna has a government in charge of the full metropolitan area and its rate is also 96/4%. Brussels' Capital Region is at 36/64%; London 56/44% and Berlin's flats rate is over 90%.

According to Eurostat flats were the preferred residence type in nine EU member states (2018 data): notably in Latvia (66%), Spain (65%), Estonia (62%) and Greece (61%). The lowest shares were recorded in Ireland (8% - Census 2016 has a higher rate but that was for occupied dwellings) and the Netherlands (20%).

The overall EU rate for flats is 46%.

In Sweden, there is a backlog of 20 years for rent-controlled housing. "To try to combat the problem of an increasingly expensive market, the Swedish government sets rent caps every year. Since 2000, rental prices have not seen an annual increase above 2%."

In 1625, a Dutch carpenter named Pieter Fransz built a house in Amsterdam’s new Herengracht neighbourhood. “As the Dutch Republic rose to global power in the 1620s,” wrote Prakash Loungani of the International Monetary Fund (IMF) in 2010 “the price of the house doubled in less than a decade. Over the succeeding three centuries, the price of Fransz’s house was knocked down by wars, recessions, and financial crises, and rose again in their aftermaths. When the house changed hands in the 1980s, its real value, that is after inflation, had only doubled over the course of 350 years, offering a very modest rate of return on the investment.”

In contemporary times, apart from land availability in cities and rises in population, there typically are restrictions in countries from vested interests that retards progress.

Ronan Lyons, the Trinity College housing economist, said last year "Comparing its stock of dwellings with its population, Ireland has no shortage of houses – rather it’s missing about 400,000 apartments. Ireland has a huge surplus of family homes."

On densification, even mid-rise developments in Dublin get local objections.

In 2017 Leo Varadkar, later taoiseach/ prime minister, wrote on behalf of constituents to planners “Four-storey apartment blocks are a design model which has long fallen into disfavour. Yet these type of apartments are a key feature of the Absainte Ltd scheme. It would be grossly insensitive to local feelings to permit such dated architecture to succeed.”

In January 2020 Joan Burton, former Labour Party leader and minister, said in a letter on another proposed development in the same constituency “The scale and height of the proposed five-block, five-storey over-basement development is inappropriate and out of keeping with the pattern of development in the surrounding area.”x

The curse of Nimbyism (not in my backyard syndrome) needs to be tackled.

Pat Kenny, a prominent broadcaster, is a serial Nimby.

Early in the last decade, the Central Statistics Office reported that 41% of the 921km² land area of County Dublin was farmland, which at least has the potential of contiguous development.

There is of course the need for development land reform covered via the link on statistics below.

Changing demographics and housing

Young Nordics, in particular, leave the nest early while Sweden has the record for single adult households without children.

Ageing societies, local and international migration to cities, and the growing trend of people living alone, are putting pressure on housing demand.

Among the EU member states in 2018, Germany and Finland recorded the highest proportion of households without children (78%), ahead of Sweden (77%), Austria (75%) and Bulgaria (74%) — data include single, multiple persons and adult couples.

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 2019, young people left home earliest in the three northern member states — Sweden (17.8 years), Denmark (21.1 years) and Finland (21.8 years), as well as in Luxembourg (20.1 years). Young people also left home before the age of 25 in Estonia (22.2 years), France (23.6 years), Germany and the Netherlands (both with 23.7 years).

Eurostat said that at the other side of the scale, young adults in Croatia and Slovakia remained the longest in the parental household. They left home on average at the age of 31.8 and 30.9 years respectively. Young adults in Italy (30.1 years), Bulgaria (30.0 years), Malta (29.9 years), Spain (29.5 years), Portugal (29.0 years) and Greece (28.9 years) also remained with their parents for longer.

Also in 2019, single adult households accounted for 57% of total Swedish households; 43% in Denmark and Finland, 42% in Germany and 27% in Ireland.

"Dear dirty Dublin"

"Does a fellow good a bit of a holiday. I feel a ton better since I landed again in dear dirty Dublin ..." is a quote from 'A Little Cloud,' one of the short stories in James Joyce's 'Dubliners' (1914). "DEAR DIRTY DUBLIN" also appears in 'Ulysses' with all caps (1922).

It was an apt description of Dublin in Joyce's youth and the expression had been quoted in 'The Dublin University Magazine' in 1846 and in 1887 the Scientific Proceedings of the Royal Dublin Society noted that it was the use of the Donnybrook Calp (limestone quarried in South Dublin) in repairing the streets that got for Dublin the soubriquet of “dear, dirty Dublin.”

In 1988 Dublin celebrated its Millenium but it was a publicity stunt and a spokesperson for the then Dublin Corporation reacted to the scepticism of historians saying “You can never get these people to agree anyway. After all, there are some who say St. Patrick never existed, but that doesn’t get rid of March 17th. And who picked December 25th as Christ’s birthday? Nobody was sure what the real day was, so they had to pick something.”

Centuries before 988 there was an Irish settlement at the confluence of the River Poddle and the main River Liffey, known in Gaelic as Áth Cliath (Hurdled Fort) and the name related to the hurdles which provided a makeshift bridge across the rivers at low tide.

The Vikings arrived in 841 but they were ejected in 902 and they returned in 917. The settlement was re-established and developed into the town of Dubh Linn (black pool). It was reputed to be the most important trading town in the western Viking world. In 1169/1170 Normans arrived from Wales and captured the town. A Danish fort on high ground was developed into Dublin Castle from 1204 and it became the seat of Norman/ English rule until 1922. The River Poddle (now underground) provided defence and later a moat.

St Patrick's Day 1844 at Dublin Castle and below Michael Collins ‘bouncing’ out through the Chief Secretary’s door after the handover of the castle to the Provisional Government of the Irish Free State, January 1922

The last British census of the whole island of Ireland took place in early April 1911. A month later the "unsinkable" RMS Titanic — then the largest ship in the world — was launched in Belfast from one of the Queen's Island slipways, as about 100,000 people cheered.

At the turn of the century, 75% of Belfast's workforce was employed in industry and the northeast produced two-thirds of production on the island. In Dublin, there was a surplus of unskilled workers and 7,000 of Dublin’s 30,000 unskilled workers were employed on a casual day-to-day basis as dockers or carters.

Almost 10% of housing units in 1911 had 10 or more rooms and of the 66,662 housing units in Dublin in 1911, 23,977 were one-room family dwellings housing 36% of the total.

The decrepit tenements gave Dublin the reputation of having the worst slums in Europe. The tenements were home to 69,796 people or 23% of the population of Dublin.

The area of the City of Dublin was 32.1km² and beyond the boundary of the city, the better off lived mainly south of the River Liffey.

The population of the City of Dublin was 305,000 and the rest of County Dublin had a population of 172,000.

Belfast had a population of 387,000 in 1911 and it had an area of 59.6km². However, 28.5km² comprised crops and pasture.

Boundary changes expanded the area of the City of Dublin to 115.5km² from 1953 and subsequent changes resulted in the current city area of 117.8km².

Census 2016 show a rise of 27,000 in the population of Dublin in 2011-2016 but 60 years later it was still below the 1966 level (there was an addition of 30 persons between the censuses of 1966 and 1971).

The population was 554,554 according to Census 2016 but the number of dwellings only grew by 4,000 from 2011.

The County Dublin population of 1.347m comprised the City of Dublin 554,554; Dún Laoghaire-Rathdown 218,018; Fingal 296,020 and South Dublin 278,769.

Apartments/flats accounted for 35% of housing stock in the City of Dublin and 25% in Dublin County.

The County Dublin population was 15% of the total population in 1911; 22% in 1951; 25% in 1961; 29% in 1991 and 28% in 2016.

From 2011-2020, Ireland's population has risen by an estimated 452,000 to 5.04m.

In the period 1911-2016, the Dublin County population grew by 182% while the population in contiguous counties grew by 233% in Kildare; 200% in Meath and 134% in Wicklow.

Even during the property boom years of the first decade of the century, Ireland didn't come close to 500 or more dwellings per 1,000 inhabitants compared with for example Portugal, Finland, France, Latvia, Spain, Germany and Denmark.

The next Irish Census has been rescheduled to April 2022.

Key Irish housing statistics 1971-2020

Irish real house prices up 175% in 50 years, UK +405%, Germany -1%

Two blog posts on James Joyce 1) James Joyce (2018) 2 James Joyce on migration and Europe (2019)

McKinsey has categorised 2 megacities in Europe, London and Paris, with more than 10m people apiece, and a young workforce with high educational attainment, and "46 superstar hubs, which have an array of high-growth industries and have been among the fastest-growing regions in Europe. They include Amsterdam, Copenhagen, Madrid, and Munich."

Stable economies are home to 50% of Europeans. "These clusters had above-average GDP per capita and attracted new residents. They include 102 service-based economies such as Budapest, Lyon, Manchester, and Riga, which have a high share of employment in nontechnical services such as wholesale and retail trade; 78 high-tech manufacturing centres, more than 70% of which are in Germany, including Stuttgart and Wolfsburg, which focus on manufacturing and produce a large number of high-tech patent applications; 64 diversified metros including Bologna, Freiburg, Plymouth, and Katowice, with a mix of industry and service employment; 267 diversified non-metro areas including East Kent, Korinthia, and Austria’s Mittelburgenland; and finally, 98 tourism havens, including Portugal’s Algarve region, Cornwall, and Mallorca. All of these areas have been hit by the travel restrictions imposed to stem the spread of COVID-19.

Shrinking regions are home to 30% of Europeans."

The Greater Dublin area is one of the 46 superstars. This likely reflects some misleading data.

Oxford Economics' Top 10 European tech cities