# Who will live in these 76,000 houses?



## belacqua (25 May 2004)

This (below) is by Robbie Kelleher from the most recent Davy Stockbroker commentary. All associated biases apply. 

It asks: who exactly is going to live in the 76,000 houses being constructed in Ireland this year? 

He does a good job of undermining the pub catch-all 'demographics' as a rational reason for house price increases.

Judge for yourself:

"The strength of the housing market has been a particularly notable feature of Irish economic performance in recent years. Total new house completions first exceeded 30,000 in 1996 and by 2002 had almost doubled to just under 58,000. 

At that point many commentators (ourselves very much included) believed that activity in the housing sector had reached a level which was substantially higher than the long-term demand and we anticipated a substantial downward adjustment in the volume of activity in the sector in the subsequent years. Indeed, from a macro-economy point of view we would have harboured fears that the downturn in the housing market would act to reinforce the downward cyclical pressures that were already emanating from the global economy.

In the event we were proven to be well wide of the mark. Not only did house completions surge to almost 69,000 last year, but evidence from the early months of 2004 strongly suggests that the number of completions will increase again this year. We recently upgraded our forecast for house completions to 76,000 for the current year. Many inside and outside the housing industry are wondering where all this demand for housing is coming from. 

True, there is a significant increase in the numbers coming into the house-buying age groups, reflecting the baby boom of the 1970s and early 1980s; but this only partially explains the jump in demand. For example, the recently published special module of the Quarterly National Household Survey (QNHS) on housing and households estimated that the number of households increased by 134,000 between Q3 1998 and Q3 2003. But the number of houses built over the same period was almost double that at 267,000. At most 25,000 of the gap is explicable in terms of the requirement to replace that portion of the housing stock that has become obsolete. That leaves 108,000 houses (21,000 per annum) that were built over that period and are now being used as second/holiday homes or that were purchased by investors who have been unable to find tenants. We have no means of splitting this residual between the two components. The discrepancy seems particularly acute in relation to apartments. 

Another table from that same survey breaks down households by the type and age of the dwelling they occupy. It shows that 11,300 households live in apartments that have been constructed since 1996. But figures from the Department of the Environment show that 74,500 apartments were constructed over that period. This all suggests that the vacancy rate in the residential sector is increasing all the time and will increase significantly again this year if our forecast for 76,000 completions materialises. It is not surprising, therefore, that residential rents have been falling for some time. They are likely to continue to do so until the house-building cycle turns decisively."


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## WizardDr (28 May 2004)

Despite the rise in construction levels referred to, most economists - apart from the ESRI - have rarely mentioned the 'density' issue. Simply stated, the number of housing units per thousand of population in Ireland ... is at about 360 per 1000.. the lowest of all European countries. The next lowest is Austria at about 390/400 with the average at about 440.

The '80% home ownership factor' refers to ownership and not availabilty.

The shortage is still several years supply away ..even at 69000 starts.


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## daltonr (31 May 2004)

Given the current need for two salaries to buy a house and also the general social trend towards less children, will we see a reversal in 15 to 20 years time.

A glut of empty houses and appartments particularly on the outskirts of cities, and in towns like Carlow where people are currently willing to commute from?

Are the baby boomers who see property as an alternative to pensions going to be caught out?

-Rd


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## shoegirl (21 Jun 2004)

*Accuracy*

I doubt that all these figures are accurate.

For a start how are "households" define.  Especially in the privately rented sector.  If 3 friends move in together in rented accomodation are they a "newlyformed household"?  And if one of them moves out, how is this accounted for?

If I, as a single tenant, move to somewhere new alone do I becomea  newly formed household again?  Will the new tenant be "newly formed?"

I reckon a lot of the demand is due to huge increases in the numbers of single-person and two-person households.  Also many tenants move as much as 2-3 times per year.  Not sure if each is considered to be a new household.

I've also got a theory that a large proportion are holiday homes and that many of these are vacant for most of the year.  Also lots of vacant homes for various other reasons.


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