Just how many homes is Ireland missing?
By dint of the timing of the seasons, the new Housing Minister has perhaps avoided of a baptism of fire. Appointed just as the summer recess started, he has had time to find his feet in the new brief without the day-to-day bearing down on him when the news cycle is back up to an hour a day.
That honeymoon is definitely over, though. Since late August, a slew of new reports has shown that the related housing and homelessness crises continues to worsen. Rents continue to rise – and indeed inflation rates are close to record levels, despite Rent Pressure Zones. With a new academic year, many students are struggling to find somewhere to live.
Sadly, a number of homeless people have died in recent weeks, leading to worries about how our country’s homeless will cope with winter. And this week, Davy released a report outlining how underlying housing demand is close to 50,000 a year nationwide. This number is consistent with my own estimates.
In short, once you factor in demographics and obsolescence, as well as natural increase in the population and net migration, it is effectively impossible to come up with a number smaller than 40,000 new homes needed a year. And if I were the Housing Minister, I would be concerned about dereliction of duty if I were assumed anything less than an underlying demand of 50,000 per year.
But this is the on-going future need. Every from now into the foreseeable future, this country needs to build 50,000 homes to meet growing demand. What about the backlog of unmet demand? It is the lack of building in recent years that has created a whole class of homeless families, living in guesthouses and hotels.
A clue lies in Ireland’s demographics. Perhaps the single widest measure of the structure of our population is the average number of people per household. It captures not only the average number of children women have, but also longevity, separation and divorce and delayed marriage.
Since the 1960s, household size has been falling rapidly in Ireland. In 1971, there were 4.1 people in the average Irish household. By 2002, it was just 3 and in 2011 there were 2.73 people in the typical household.
While these sound like relatively small changes, just think about a change from 4 to 2, which is where some European countries like Denmark and Germany now are. Even with the same population, if the demographics change so households are on average two people, not four, the country needs twice as many dwellings!
Thus, a huge source of Ireland’s housing need over the past half-century has been the decline household size. But an odd thing happened between the 2011 and 2016 Censuses: Ireland’s household size actually rose, although only slightly.
The reason is not a baby boom, as you might be tempted to think, but rather a lack of housing. Diving into the Census figures, the growth in households over the last few years has been driven by what might be called “crammers”, in other words, unrelated persons living together because that’s their least worst option.
Think about that for a moment: Ireland’s housing shortage is so acute that it has actually overturned incredibly powerful demographic trends that have been driving the structure of Ireland’s population for over five decades.
This same underlying trend, however, also gives us a clue as to how many homes we’re missing. In the half-century to 2011, Ireland’s average household size fell by almost 1.5 – or an average rate of 0.16 persons each year. Therefore, if housing had not been scarce in recent years, we would have seen it fall to 2.57 in the 2016 Census, not rise to 2.75.
Assume, to be conservative, that nobody in Ireland put off having children in recent years because they couldn’t afford the housing – in other words, population was unaffected, just household formation. This means that, between 2011 and 2016, Ireland fell 120,000 homes behind schedule.
This is a simply astonishing backlog of unbuilt homes, given this is a country of just 1.7 million households. To put it in context, the fall in vacant homes between the same two Censuses was just 30,000.
On top of this backlog of 120,000, each year 50,000 new homes are needed. As the new Housing Minister prepares himself for his first autumn and winter in the job, the stunning inability of housing supply to meet demand must surely dominate his thoughts.