Ronan Lyons | Personal Website
Ronan Lyons | Personal Website

Should we ban house-building inside the M50?

The housing woes of Ireland – and Dublin in particular – at this stage well document and largely well understood. There are few who think we are fighting the last war. As the ESRI said last week, the housing market not undergoing the kind of credit-fuelled bubble that afflicted it in the early 2000s.

Nonetheless, just because it is not a credit bubble doesn’t mean that it’s a healthy housing market. Far from it. New CSO figures out this week confirm that the stock of dwellings, measured in euro terms, had been largely stagnant the past decade. While this may have made sense for the period 2007-2012 – when the country as a whole had too much, rather than too little housing – the lack of new housing supply over the last five years has cost the country.

This cost has a number of elements. Probably the most visible cost to society is rising homelessness – especially of lower-income families. Another long-term cost is the impact the lack of housing is having on competitiveness, especially in Dublin. The American Chamber of Commerce recently published a report, which I was involved in, highlighting the challenges faced by their members as they seek to expand and create new jobs in the city.

But I was involved in another report – for Activate Capital, a financer of developers joint-funded by the taxpayer through ISIF. This report found that the bulk of Ireland’s housing need is not actually for the type of housing we are used to seeing built.

There are significantly more family homes in Ireland than there are families: almost 25% too many, when you compare the 700,000 families in Ireland with the 900,000 dwellings to fit families. This is not even a problem in the greater Dublin area, where there is a 10% surplus.

Instead, the country’s housing shortage is entirely driven by apartments, or homes for 1-2 persons, and not by 3-4 bedroom houses. The term ‘apartment’ is a bit narrow. Ireland’s roughly 500,000 missing apartments does include medium-to-high rise apartments in urban cores for young professionals – and low-to-medium rise suburban apartments for empty-nesters.

But Ireland’s missing homes also includes tens of thousands of units in purpose-built student accommodation and co-living developments for key workers and young professionals. It also includes a similar number of missing homes in our largely non-existent independent living and assisted living segments for the country’s older residents.

These half a million missing homes represent a backlog – but it is not even a simple matter of meeting the backlog and then returning to ‘business as usual’ and building lots of family houses. When it comes to Ireland’s demographics, the outlook for the rest of the twenty-first century will be driven by three main forces: population growth, urbanisation and falling household size.

Unlike any other European country, Ireland will experience faster population growth in the 21st century than in either the 19th or 20th. For the century and a half to 1990, Ireland typically lost 5% of its population each decade. During the 21st century, the country will gain 5%. Every other European country is experiencing a slowdown.

You could argue that, since the Famine, the country has been a late bloomer, not only in terms of living standards but also population densities. This argument holds true for urbanization also. Ireland is now roughly as urban as the typical Western European country was 50 years ago. Over the next half-century, the country will go from 65% urban to 80% or more urban.

And lastly, there is household size. Once again, we are behind the curve. All European countries are on a journey from 4 persons or more in the typical household to just 2, or maybe slightly above. Ireland remains well above our peers, with 2.8 persons currently in the typical household. But this number has been falling steadily in Ireland since the 1960s. And it will continue to fall over coming decades.

Add these three factors together, and by 2080, you have a population of perhaps 6.3 million people living in Ireland, 80% or more of whom living in the cities and with the vast majority of households comprising just one or two persons. This is not a recipe for strong demand for housing estates even further out from our urban cores.

This is a recipe for building hundreds of apartments – of whatever type – in Dublin and throughout the country, every month for decades. Just taking Dublin alone, the city will in rough terms 2,500 apartment blocks with an average of 200 apartments built over the next half-century.

With a need for apartments this size, it certainly seems perverse of local authorities to favour commercial – especially office space – over residential. And it also seems perverse to allow development of estates of family houses when the city has an abundance of them already and when there is such a scarcity of apartments.

Given this stark background, it would seem prudent for Dublin’s four local authorities come together and agree both on a long-term multi-decade goal for housing in the city. It also seems wise that residential development, where it happens in the city, should be primarily – almost exclusively – in the form of apartments, not houses.

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An edited version of this post was originally published in my column in the Sunday Independent.

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