IS IRELAND 25 YEARS INTO A 100-YEAR HOUSING CRISIS? Ronan Lyons, Department of Economics, Trinity College Dublin Dublin Economics Workshop Annual Conference Wexford, September 2017
DEW Annual Conference, 2017 Ronan Lyons 2 Ireland has no shortage of houses! Comparing its households with its dwellings, Ireland has too many houses This is true both for Dublin (~10% surplus) and elsewhere (~30%) By house, I mean family home a dwelling with 5-7 principal rooms E.g. the classic three-bed semi-d This house surplus means that 200,000 households (of 1.7m) comprise unrelated persons 600,000 500,000 400,000 300,000 200,000 100,000 0 Households by number of persons and related dwelling stock, 2016 3-5 person households 3-5 person dwellings GDA Ex-GDA ~30k surplus ~130k surplus
DEW Annual Conference, 2017 Ronan Lyons 3 Ireland is missing about 500,000 apartments, though Ireland does have too few apartments, though In Dublin, there are 120% more 1-2 person households than dwellings Elsewhere, there are 180% more Ireland has 10 single young people for every studio apartment Of 0.6m households added since 1996, ~2/3s comprise 1-2 persons This should not have been a surprise HH size declining since the 1960s And will continue to converge to the EU average of 2.3 (currently 2.75) 600,000 500,000 400,000 300,000 200,000 100,000 0 Households by number of persons and related dwelling stock, 2016 1-2 person households 1-2 person dwellings GDA Ex-GDA ~190k deficit ~340k deficit
DEW Annual Conference, 2017 Ronan Lyons 4 Compared to other EU countries, and to its own population structure, there is a shortfall of ~450,000 apartments in Ireland currently Ireland has just 12% of its dwellings in apartments a quarter the EU average Latvia Estonia Italy Spain Switzerland Lithuania Iceland Finland Poland Germany Austria Slovakia Czech Rep Bulgaria Sweden UK Greece France Liechtenstein Portugal Luxembourg Romania Hungary Denmark Croatia Slovenia Cyprus Norway Belgium Netherlands Malta Shetland Ireland Fraction of dwellings in apartments 0% 20% 40% 60% 80% Dublin s apartment rate is one third the rate seen in many of its peer cities Bilbao Frankfurt Copenhagen Cologne Prague Nice Oslo Florence Zurich Helsinki Brussels Zagreb Stockholm Belfast Amsterdam Porto Birmingham Dublin Fraction of dwellings in apartments 0% 20% 40% 60% 80% 100%
DEW Annual Conference, 2017 Ronan Lyons 5 Ireland never built enough apartments not even in the Celtic Tiger If Ireland were in line with the EU, it would have 0.8m apartments [vs. 0.2m] Dublin: ~375k, rather than the ~125k Persistent underbuilding of apartments, especially during the Celtic Tiger Just 15% of new dwellings 1996-2015 were urban apartments Twice as many rural one-offs were built during the same period If Ireland is to fall to EU household size (2.3), even with fixed population, it needs 300k extra dwellings These are almost entirely apartments New dwellings completed in Ireland, 1996-2015 (thousands) 228 237 Urban/GDA apts Rural apts Other rural 125 53 215 Urban/GDA houses Rural one-offs
DEW Annual Conference, 2017 Ronan Lyons 6 Ireland s mismatched housing and labour markets are creating unsustainable commuting patterns Ireland remains one of world s least urbanised high-income countries Ireland s lack of urbanization is due to its housing, not labour, market Half the daytime population of Ireland s three largest cities travel from outside One quarter of Leinster s working pop n (ex-dublin) travels to Dublin each day In 2016, >230,000 people commuted at least an hour each way This represents a 30% increase in long commutes in just five years 100 90 80 70 60 50 40 30 20 10 0 Urbanization rates, 1960-2016 by country 1960-2016 change 1960 urbanization Ireland Portugal Italy Germany Greece France Spain OECD Norway Canada USA UK Finland Denmark Australia Luxembour Netherland g Iceland s Japan Belgium Source: World Urbanization Prospects, 2016
DEW Annual Conference, 2017 Ronan Lyons 7 Ireland s inability to built apartments is likely a result of its unique demographics The lack of apartment building in Ireland before the 1990s is likely to be driven by demographics Ireland was the only European country to experience persistent population decline in the 19 th and 20 th centuries Over coming decades, it will experience one of the fastest rates of population growth in Europe Growth of ~5% a decade 2010-2020 will represent a 10% swing compared to the period 1850-1980 All other European countries will experience slower population growth 15% 10% 5% 0% -5% -10% -15% -20% Average decadal change in population, by country and era, and change in same 1850-1980 2015-2080 Swing Bulgaria Greece Romania Portugal Poland Netherlands Italy Finland Hungary Germany Denmark Spain Norway Belgium Austria UK Sweden France Ireland Source: Eurostat Population Projections (2013); Maddison dataset
DEW Annual Conference, 2017 Ronan Lyons 8 It is not just a backlog population growth, demographic change and urbanization mean the need for new apartments persists until the 2080s Addressing the current backlog of apartments (~500k nationwide) means 25,000 p/yr until 2040 If Eurostat is right and Ireland s population reaches 6.2m by 2080 (modest?) By then, Ireland is 80% urban and its average household size is 2.2 (modest?) Then Ireland s five largest cities will house 5m people, mostly in 1-2 person households The country will need 1.9m apartments i.e. 25,000 per year until we re dead! 900 800 700 600 500 400 300 200 100 0 Number of apartments built/required in Dublin per month, by period 1990s 2000s 2010s Required
DEW Annual Conference, 2017 Ronan Lyons 9 Enough with the bad news, give us some role models! Toronto Brisbane
DEW Annual Conference, 2017 Ronan Lyons 10 But how could we do that in Dublin? 400ha (~1000 acres; 30,000 dwellings) inside the M50 to get you started And another 250ha (>20,000 dwellings) if you fancy a fight! But also: Dublin Industrial Estate
DEW Annual Conference, 2017 Ronan Lyons 11 Thank you for your time! To summarize Dublin needs a block of 200 apartments to open EVERY WEEK from now until the 2080s