Population Pressure on Housing greater than thought

The CSO produced another set of surprising data today, at least to some, with the publication of preliminary figures from the recent census. The population had been estimated at 4.64 million as at April 2015 , implying an average annual rise of around 15k since the 2011 census. Consequently the 2016 census figure , at 4.76 million, was much higher than generally expected, with the total increase over the past five years at 170k, or around 35k per annum. The natural increase (i.e. births minus deaths) was put at 198k, with the residual, net migration, at just -28k. In other words there has been a net outflow from Ireland over the past five years but it is now seen as much lower than previously estimated; the CSO had put net emigration over the four  years to April 2015 at 100k. So the numbers emigrating may have been lower than thought  and/or immigration may have been higher, with the latter more likely, given past episodes of population underestimation.

This Blog has pointed to growing capacity constraints in Ireland, particularly in and around the capital, and these figures only serve to underline the point. On housing, the census reveals that the housing stock rose by just 19k over the past five years so what limited new construction we have seen has barely managed to offset depreciation.

The CSO points out that the growth in households (3%) has lagged that of population growth as a whole (3.7%) , indicating that the availability of housing is an issue. The census reveals that the vacancy rate of housing nationally , excluding holiday homes, has fallen to under 10% from 11.5% in 2011 and 12.5% in 2006. In the past houses were built in areas that people did not want to live so the vacancy rate varies wildly across the country, from well over 25% in Donegal and Leitrim to single digits in Dublin and surrounding counties. Indeed, if one excludes holiday homes (small in number) the vacancy rate in South Dublin is 3.9%, and below 6% in both Fingal and Dun Laoghaire Rathdown.

Trying to suppress the symptoms of excess demand for housing ( by, for example, capping rents) is not sensible in economic terms and the only solution is to build more.  Moreover, these figures imply that the consensus estimate for housing demand of 25k per annum is now too low, as net emigration  has been overestimated, and indeed may already have turned to net immigration.