The CIF have just published a report ‘Future Housing Supply in Ireland‘. Their main argument is that there is between 6 months and 4 years housing supply across the country and yet housing building has all but stopped except for a limited number of one-offs (80% of units built in 2010). In particular, Limerick City, Wicklow, Kildare, Limerick County, Cork City, Waterford City, Greater Cork, Kerry, Galway City, South Dublin all have less than 6 months supply. Meath, Clare, North Tipp, Fingal, Cork County, Mayo, Dublin City, DLR, Galway County, Westmeath, South Tipp all have less than 12 months supply. In other words there is an urgent need to start building houses again in a number of places around the country as there is a very real danger of running out of supply in these areas (see Figure 1). The report is an interesting lesson in how to combine and spin data for a particular vested interest purpose.
CIF housing demand projections
Principally what CIF have done is taken the DEHLG unfinished estates survey data and matched it to the target population projections in the Regional Planning Guidelines. There are three main issues with this.
First, it tries to reduce housing supply to the overhang of unsold new housing, ignoring the bigger issue of oversupply (all units inexcess of a base vacancy rate). The DEHLG itself calculates that oversupply (122-147K) is significantly higher than overhang (43K) – see our key housing stats post. As we have argued at length elsewhere to try to ignore the issue of oversupply and only focus on brand new houses is a massive folly as it only considers one part of housing stock.
Second, it assumes that the population growth targets issued to Regional Authorities in 2009 are realistic. These projections were based on 2002 and 2006 census data when there was significant population growth. The demographic shifts occuring in Ireland in 2011 are very different to that period. We are back into a period of emigration and the projections are almost certainly over-estimates.
Third, the wider economy is in the middle of a severe recession. It is very difficult to source mortgage credit, unemployment and underemployment is high, and the next generation of first time buyers are emigrating. There is little to no credit for investors. The housing market is simply flat.
In other words, the data entering the model is on the one hand selective and on the other suspect, and the study ignores the general context of the wider economy. CIF have been telling us for 12 months plus now that we only have 6-12 months supply in some areas of the country. It seems barely credible to argue that many places will run out of housing in 6 months time. This is simply is not going to happen given the levels of oversupply, emigration, stagnation in the housing market, and the state of the wider economy.
Census 2011 should give us a good idea as to where we are with housing and population/household demography. Once the data is released our housing supply/demand models can be recalibrated and we’ll have a better idea as to what kind of building programme we’ll need. Regional Planning Guidelines and Local Area Plans should then also be recalibrated. I seriously doubt we need to panic about supply until we have that data. If the CIF want a case for stimulus, it might have much more credibility arguing for investment in infrastructure than housing. The solution to an oversupply problem is not to produce more supply, it is to work it off.
Rob Kitchin
Ireland after NAMA 
February 2, 2011 at 4:21 pm
This post illustrates the need for independent and realistic monitoring of housing need at a national level that can subsequently inform planning decisions.
While at present there is clearly a signficant oversupply nationally with no evident need for further construction at some point it will be neccessary for more nuanced assessments to be made regarding demand within particular local and regional markets.
A careful balance may need to be struck between deflecting demand to areas of existing oversupply which may not be best positioned in terms of public transport etc. and facilitating development where there is clear demand at more appropiate locations. I don’t think we are quite there yet though.
February 2, 2011 at 8:05 pm
[…] suggested on IrelandafterNAMA, CIF’s energies might be better directed toward infrastructure development or conversion of […]
February 2, 2011 at 8:05 pm
[…] suggested on IrelandafterNAMA, CIF’s energies might be better directed toward infrastructure development or conversion of […]
February 2, 2011 at 9:35 pm
CIF and statistics.Twist them any way you want. reminds me of the story about the guy who put one foot in a basin of ice cold water, and the other foot in a basin of boiling water.
Statistically his feet were at a comfortable temperature..
February 3, 2011 at 12:45 pm
“When men wish to construct or support a theory, how they torture facts into their service”
Memoirs of Extraordinary Popular Delusions
by Charles Mackay
I notice in these columns that so called “sustainable” housing policies such as those advocated by Frank McDonald receive approbation whilst those advocated by others such as the CIF are “on the one hand selective and on the other suspect”. It might be well to consider an article in today’s Independent (http://www.independent.ie/business/irish/signals-were-flashing-red-on-the-property-bubble-but-were-ignored-2523133.html)
It is, I am sure, cathartic and noble to bang on about sustainability and tight control of development, but I have yet to hear a sensible suggestion that might avert the economic problems created when as few as eight persons can control all zoned land in north Dublin. I am sure that the situation is much the same elsewhere and I am certain that this it is the search for cheaper land that forced smaller builders into the smaller towns and villages.
It is surely past time that we begin to pay attention to the real facts which determine the location of development rather than the utopian mirage of “sustainability”.
February 3, 2011 at 3:29 pm
The point now is not to zone more land but to clear as much of the backlog as possible. This will need state intervention in difefrent ways — for example, use/enforcement of ‘use it or lose it’ provisions for approvals and public land development (both social and for-profit) in targeted areas where market clearance mechanisms won’t work.
Zoning: the first, but only the first step, in the supply-to-development process. It needs to be done with great deliberation (openly and accountably).As history has shown time and time again, open slather is the short run to overrun as unccordinated compeition drives inevitably towards oversupply and painful ‘cyclical correction’. The step after zoning is critical: to have market forcing mechanisms (as mentioned above) to prevent hoarding, cartel behaviour and purposeless landbanking.
February 3, 2011 at 4:46 pm
[…] seems to a lot of revisionist history going on over the last few days. First the CIF yesterday published a report on future housing supply in the country, arguing amongst other things that “County Galway is […]
April 1, 2011 at 8:37 am
[…] Regardless of the decline in one-off permissions from the height of the boom, a debate seems desirable on how sustainable this pattern of permissions/build is over the long term. On the one hand are arguments relating to individual rights, culture and ‘way of life’, and on the other, the costs of servicing one-off houses, the costs to the environment and landscape, and the vulnerability of dispersed, long commuting populations to rising oil prices. This is clearly a contentious and highly politicised issue, but then what planning issue isn’t? Our strategy so far has largely been to ignore such debates and plough on with a laissez faire approach designed to sate local demand and leverage councillor’s votes. As for whether we need to be awarding any permissions at all, given the vacancy and under-construction rates of both residential and non-residential property in the state, also seems like a debate worth having – on the one hand, the construction industry is in severe difficulties and needs investment, on the other the solution to over-supply is not more supply (and scare stories about there only being between 1 to 12 months supply in most areas by some vested interests lacks compelling evidence and credibility – see our post here). […]
October 13, 2011 at 12:29 pm
[…] suggests that rhetoric about there only being 12 months or less supply in many counties (as stated by the CIF) or that we need to build 30,000 units per year for the next 15 years needs to be treated with […]
February 7, 2012 at 8:56 am
[…] report itself has disappeared from open access on the CIF website. IAN posted on the report on Feb 2nd 2011. In their report the CIF argued that “Nationally, there appears to be less than one […]