The Irish housing market seems to lurch from feast to famine, often prompting Government intervention, in turn exacerbating rather than ameliorating the volatility. For some time now it has been clear that the market has moved from one of excess supply to one of excess demand, and the 2016 Census data confirms that annual supply fell to such a low level over the past five years that it was barely offsetting the obsolesence rate , with the result that the housing stock has only marginally increased, against a background of a rising population and a recovery in household income.
The stock stood at 1.995 million according to the 2011 census and some of this will become obsolete over time. A commonly used figure in Ireland is 0.5% annually, implying the loss of around 10,000 housing units a year. Yet completions ( itself a less than perfect proxy for actual new supply) fell well below this in 2012 and 2013 and although they have picked up the figure for 2016 was less than 15,000. Indeed, total completions between the 2011 census and April 2016 amounted to some 51,000, implying little or no change in the net stock. In the event the Census revealed a figure of just over 2 million, a rise of less than 9,000 over the five year period.
The population was not static, of course, rising by 174,000 or 3.8% over the five years , with the result that the housing stock per head of population actually fell, a reversal of the normal trend.The number of households also rose substantially, by over 48,000, which alongside the absence of any meaningful increase in housing supply resulted in a 47,000 fall in the number of vacant properties ( excluding holiday homes). The latter figure stands at 143,000 nationally, or 9.1% of the housing stock, although this masks huge variations across the country, with the ratio being much lower in and around Dublin, including 4.7% in Fingal and only 3.6% in South Dublin.
One ‘solution’ to the supply issue is to simply wait and rely on the market to function, on the basis that rising prices will bring forward new builds. The evidence does point to this happening, although it may well take a few years for supply to match annual demand, let alone eat in to the cumulative excess that has arisen over recent years. There is also a case for the State to fund housing on a much larger scale, on the basis that large numbers will never afford their own home, although euro fiscal rules are a constraint. Unfortunately, the policy response has been to either address the symptoms of excess demand ( by seeking to control rents for example) or to boost demand further by giving subsidies to certain types of buyers. The former does seem to be having an effect in that data from the CSO shows rents rising by just 1.5% in the three months to March. Moreover,Dublin apartment prices actually fell in the three months to February, which if maintained is unlikley to encourage supply.