Back in January 2011 the Construction Industry Federation (CIF) released a study entitled ‘Future Housing Supply in Ireland’.  The press release is here, though the 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 year’s supply“.  The CIF list a number of local authorities who would run out of housing in 6 months (Limerick City was predicted to run out a little after a month) and a dozen more that would run out within the year.  Nowhere was estimated to have more than four years supply.  To quote from our piece decribing the CIF claims from last year:

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).” (see below)

We were deeply sceptical about the CIF claims at the time and set out our reasons why.  We were also one of the entities dubbed ‘non-official sources’ in the press release, which basically means independent and therefore with no vested interest – it is up to you whether you view that as a good thing or a bad thing.

So where are we one year on?  Needless to say that no local authority is experiencing an acute shortage of housing units.  In fact, most still have an abundance of vacant stock (see this post and this one) and unfinished estates (see this post and this one).  There has been practically no change on the housing front over the past year, and what change there has been has been concentrated into a few select locales (see this post).  In my view, housing demand is unlikely to change very much over the next one to two years for the reasons detailed in this post.  Demand is mostly likely to come back in the cities and their suburbs first, but might take a long time in some rural areas. Everywhere demand and supply need to be tightened right back up before building starts again.  That means only building at the point where potential buyers are starting to bid against each other for property.  Anything else will keep the market falling or flat.

That’s not to say that we do not need construction, but that it should be concentrated into public infrastructure projects such as green energy, ICT networks, utilities, services such as schools and hospitals, and public transport.  Such infrastructure is a long term investment that will help to attract and support business and help grow the economy.

As I have recently argued at the Irish economics conference in Croke Park: “We need robust housing planning models using demographic and labour market data at fine spatial scales as the foundations to revised development plans before embarking on any new major house building programmes”.  The basis for this has to sound, independent analysis, not the kind of scaremongering and plain wrong analysis forwarded by vested interest groups, that helps nobody including themselves.  The full workings of the models produced and the data used also need to be made available to all citizens, so they can evaluate both the analysis and the resulting planning and development proposals.


CIF housing demand projections, Jan 2011

Rob Kitchin