Irish Housing Crisis, Supply and Measurement
The recent election was dominated by social issues and particularly the housing crisis. Every party agreed on the need for improved supply. While they differ on estimates and means for achieving supply, they agree it’s needed. But they all ignore a fundamental problem in Ireland — we do not have a robust method of measuring actual home completions.
The Central Statistics Office released their figures on the number of dwellings completed in 2019 this week and spectacularly the number rose by 18.5% from the previous year. Making it the most productive year for house completions in a decade. This must be a good thing, right? Not entirely.
For many reasons we shouldn’t rush to celebrate these latest results. Namely the metric used for completed dwellings by the CSO is flawed, and they even state this caveat on their website.
The CSO website states the following warning when it comes to these figures;
“The primary data source used for the New Dwellings Completions series is the ESB Networks new domestic connections dataset where the date that the connection is energised determines the date of completion. It is accepted that the ESB domestic connections dataset is overestimating new dwellings and the CSO has adjusted for this overcount by using additional information from the ESB and other data sources.”
While they do go on to clarify that they utilized other data sources where possible they admit that the ESB Connections data is not foolproof and still a work in progress. This might seem like nitpicking, but it is actually very important to know how these figures are recorded.
Firstly, new energy connections aren’t necessarily representative of new builds in that calendar year. This represents dwellings set up with new electrical connections in 2019. Therefore, this doesn’t differentiate between dwellings that were built in 2018 and connected in 2019. The CSO say that they utilize other data sets where possible to verify their information, but they admit this isn’t totally quantifiable.
Secondly, it is important to note that new energy connections for dwellings can refer to buildings suitable for dwelling but not necessarily designed as a new dwelling or being used for living purposes. The CSO doesn’t clarify this directly and there isn’t a method beyond physical surveying and counting to address it. Any data set is limited here and that must be appreciated, but the housing crisis is a national emergency and should be treated as such. This data set and means of analysis is particularly limited and unless it is address, we risk vacuous circular debate on the issue for years to come.
This raises the question, if targets are made in real terms and completions are based on estimations then how do we assess progress?
For instance, the rebuilding Ireland framework set out that “an average of 25,000 homes be produced every year in the period to 2021”. What defines production? Is that stipulated as new energy connections? If I made a deal to pay my landlord a figure each month and then came back to him with estimations, I’d be out on my ear rather quickly. Going forward we need to hold our government to account on these issues and the first step towards this is improve measurements methods and quantifying real data.
Furthermore, the increase in dwellings completed is substantially improved by apartment completions. This poses another issue that hasn’t been addressed to date. What type of housing supply is needed?
Social norms around housing in Ireland and particularly in urban areas aren’t being identified when addressing the housing crisis. Across Europe it is normal for many young people, even young families, to live in apartments. Yet, in Ireland we don’t see apartment living as a long-term solution and we still harbour misguided aspirations of owning our own homes. In an Irish Times article last week it was noted that roughly 80% of these apartments were purchased by investors for private rental sector. This limits apartments to being short term solutions. A fact that further reinforces the negative social norms and serves only to exacerbate the problem. We should be encouraging apartment living as a long-term solution but instead it is being produced as a short-term fix.
While new supply will ease demand and alleviate high rent in the short term it isn’t going to address the issue going forward. Particularly when most of the development and new jobs are centralized in the Greater Dublin Area. According to the CSO figures completions were highest in Dublin at 2,086. Furthermore, over 55% of all new completions were in either Dublin or the mid-East regions. With this area maintaining the most draw for housing and jobs it is fair to assume that the new supply will be met with new demand at an ever-increasing rate.
Another major element of the housing crisis relates to the supply of public housing. This is a systemic issue in Ireland and one that can be attributed to the mismanagement of social housing in the 1980’s. Asset based welfare in the 1980’s led to corporation housing being sold below market value to occupants in a misguided attempt to lift people out of poverty by making them homeowners. While many people benefited from this system at the time the long-term results have been realised in recent years. This practise has continued, and we don’t have enough social housing in Ireland as a result. We still haven’t addressed our shortage here and the latest CSO statistics don’t speak to this issue, the previous government is quite far behind their own targets even when measurements are overestimated as we see above.
Our problem is multifaceted. We have a measurement method that isn’t robust, and we haven’t addressed the type of dwellings we want to focus on. If we don’t address these issues soon then we risk getting lost in a vacuum of incoherence.
