Irish Housing, 1981 – 2006: Take A Bow To The New Revolution

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Irish housing statistics are notoriously vague. There is no accounting system for new housing units – rather, the CSO has to rely on figures from the ESB with regard to new connections, and from that it extrapolates the amount of new units.

The CSO’s figures for the amount of mortgages sold is also somewhat oblique, as the mortgages are filed under new and second-hand housing only. It’s going to take a bit more digging, but hopefully the figures are there in bank and building society annual reports or the household bulletins. (The Irish Banking Federation provides such a breakdown for mortgage sales from 2005 onwards.)

There are reasons why the actual figures of sales of houses in Ireland are somewhat vague and abstract. On 3 April 2001, Maev-Ann Wren wrote a piece for the Irish Times which is worth quoting:

In the mid-1980s a colleague and I “torpedoed the property market”, or so we were told. As financial reporters, we had examined the drop in house prices over the preceding 18 months. We documented falling prices on individual streets, even published photos of the houses. Our efforts distressed property interests.
One interested party invited us for a drink (we went Dutch) and sorrowfully informed us that this sort of honesty was not good for “some of us who are trying to keep a market going.”
This was a frank admission that the emperor wore no clothes, that the level of house prices owes as much to belief as demand for houses. If people expect prices to rise, they hasten to buy. If they expect them to fall, they wait for a better bargain. Falling prices is a buyers’ market.
I remember this now when I see estate agents and others with a vested interest in the property market forecasting an increase in house prices. They know that such prophecies can be self-fulfilling.”

Facts are garlic to estate agents. They recoil in horror at empiricism.

Irish Property Genius

With regard to 1981 to 2006, I’m going to focus in on new private housing, and mortgages sold for the purposes of purchasing a new house built by the private sector.

I’m taking on board the assumption that in terms of housing supply a second-hand house purchase is a neutral purchase. Either the original occupants have purchased a new home themselves and have ‘freed up’ a second-hand home, or they have died or emigrated. The purchasing of second-hand homes by owner-occupiers is like a bubble in a carpet: eventually the demand for housing ends up in the new homes market.

So we have here three sets of figures from the CSO. We know the yearly increase in households. We know how many new housing units were built, and we know how many new mortgages were sold.

irish housing

We should keep in mind that not every household is an owner-occupier household. The CSO and the Census states that :

A private household is defined as a group of persons living together (usually but not necessarily related), jointly occupying the whole part or part of a dwelling house, flat or temporary dwelling and sharing a common budget. A person who lives alone or a person who occupies only part of the living accommodation but does not normally share a common budget with the other occupants is also regarded as constituting a separate private household.

So, the carvery-munching Ikea lovers with a plasma TV and a soulless Semi-D, and the guy in a bedsit on the North Circular Road, with fourteen cans of Dutch Gold and a soiled copy of Nuts, both are households. Both make it into the stats.

Nevertheless, the amount of households edges us towards at least the parameters of demand. There’s no point building houses without households, no?

What we see with the figures for household, loans, and construction, from the 1980s onwards, is a constant oversupply of new housing in the state.

There are other factors to keep in mind, such as the need to replace old/decrepit housing with new structures, as well as second homes/holiday homes.

We know that in 2006, there were 216,533 empty housing units in the state (see 2006 census report). This does not include the number of holiday homes, which stood at 49,798.

Life After NAMA estimates the vacant housing figure to currently stand at 302,625, and again this is exclusive of holiday homes.

When we look at possible oversupply from 1981 to 2006, this is what we arrive at.

oversupply.jpg

When we look at the excess of new housing over new house loans, we arrive at a figure of 297,318. This is about 8% less than the excess of new housing over new household figure, but one that largely follows the same trend over the years.

This is the breakdown of excess new housing over new loan paid out by mortgage providers, 1981 to 2006.

untitled.jpg

We know that there was a constant build-up of oversupply of housing in Ireland from the 1980s onwards, that the hundreds of thousands of empty units did not suddenly appear with the ‘Bad Celtic Tiger’ of 2002 to 2006, but were constantly being churned out while the estate agents pleaded “demand!”.

How did oversupply affect prices?

To go back to Maeve-Ann Wrens quote from above:

the emperor wore no clothes… the level of house prices owes as much to belief as demand for houses.

Indeed.

 

10 Responses

  1. William Wall

    June 28, 2010 9:53 am

    I always find Conor McCabe’s posts interesting – this one particularly so.

    So we have 297,318 surplus habitable houses in the state. The next question is: How many people are on the housing waiting list? And the next question is:How many people are living in substandard housing or overcrowded conditions? Are these figures available? I’ve been trying to track down a national housing list figure without success. Perhaps I’m looking in the wrong place.

    Am I right in thinking that a substantial number of these houses now pass into state ownership via Nama? If so, isn’t this a glorious and revolutionary moment when the developers can really be seen to have been serving the public good? Could these houses now be put to good use – housing the houseless and those living in substandard conditions, giving good homes to therapeutic communities in the healthcare system (knock a view terraces together and you have a substantial complex), etc.

  2. Conor McCabe

    June 29, 2010 5:20 pm

    Thanks for the comment William. One of the worst things about the past 15 years – and there’s a lot of worst things I know – is the fact that a sizeable proportion of the new housing constructed is of a sub-standard level. People have bought, with 30 and 40 yr mortgages, houses that will last maybe 10 yrs before they’ll need a substantial structural reinvestment. A lot of people have already found that out to their cost, especially anyone who bought an apartment.

    So, in that respect there are tens of thousands of people who are not renting or on any housing waiting list, but who are living in substandard accommodation. Not only that, they’re actually paying a 30yr mortgage for that privilege as well. Talk about a poverty trap.

    With regard state ownership, NAMA and housing.

    According to councillor Matt Perry, last year the Dublin City Manager approved a scheme whereby Dublin City Council will block-rent apartments as social housing. This is just an unbelievable scam. The landlord/builder can’t sell the apartments, because nobody wants them or can afford them, so he gets a guaranteed rent, paid for with taxpayers’ money, for twenty years, along with all keep and maintenance paid for as well, and in a few years’ time he gets to sell them off if/when the market picks up again.

    The shit just never stops, does it?

  3. William Wall

    June 30, 2010 8:38 am

    The shit appears to be infinite, Conor, though that may only be because we’re down at the bottom of well and someone is sitting atop the well and…
    The ‘Save The Developers’ party is in the ascendant at present, with plenty of help from their friends. Did you see the recent Irish Times piece on Harry Crosbie, another man of the people who is only doing his best for the city he loves?
    I take it, for your response, that you don;t know the answer to the first question – how many people are on the housing list. I’ve tried making an educated guess based on partial figures (don’t even know where I found them now – maybe I should apply for a job as an Economics editor somewhere) and came up with the possibility of 120,000 families in need of housing. If any reader can point me to where I might find exact figures, I’d be appreciative.

    As regards the substandard apartments, I’ve been watching a NAMAnated development hear my home. It consists of steel and cladding stuffed with fibreglass insulation. I’d hate to have to hang a picture on any of its walls.

  4. Conor McCabe

    June 30, 2010 9:35 am

    Oh right. for figures on housing waiting lists, you should go to the Irish Council for Social Housing.

    The Housing Needs Assessment is a survey of housing needs in local authority areas.

    It´s carried out every three years, the last one was in 2008.

    According to the 2008 survey there are 56,249 households registered with local authorities for social housing – a 28% increase on the 2005 figures.

    http://www.icsh.ie/eng/housing_in_ireland

  5. William Wall

    June 30, 2010 9:40 am

    PS 52,249 households could be accommodated in NAMA’s ass pocket. That’s actually astonishing. Even in neoliberal terms it wouldn’t dent the market when you consider the number of surplus housing units. (assuming those are habitable houses). And anyway, there is no market to speak of at present. We could eliminate the housing list in one year.

  6. Conor McCabe

    June 30, 2010 9:42 am

    Just to point out that your figure of 120,000 may not be that far off the mark. The council acknowledges that the level of housing need is significantly under-represented by the housing lists.

  7. William Wall

    June 30, 2010 9:45 am

    Ah. That was why I included a reference to substandard housing. I had in mind people who had a roof over their heads but not much else. Even at 120,000, NAMA represents a glorious opportunity. Or at least it would if it really was public ownership.

  8. Small Girl

    June 30, 2010 10:33 am

    Ref public ownership does anyone have a good book recommendation on public-public partnerships? I did see John Bisset’s article on Whitfield’s Public Assets book (ILR 23/2/2010) but anything else? Even a good critique on public-private p/ships?

  9. Conor McCabe

    June 30, 2010 11:02 am

    An overview of PPPs in Ireland in 2003 by University of Limerick academic Eoin Reeves. Gives a history of them as well.

    http://www.azevedosette.com.br/ppp/download/artigos/public_private_ireland.pdf

    Reeves´’ other works are worth checking out. See his home page

    http://www2.ul.ie/web/WWW/Faculties/Kemmy_Business_School/Departments/Economics/Faculty_and_Staff/Eoin_Reeves

    His chapter on privatisation in Ireland from the 2007 publication, Perspectives on Irish Productivity, is available as a pdf here:

    http://www.forfas.ie/media/productivity_chapter11.pdf