Census figures prove lack of supply is our big issue
The latest data from Census 2016 makes for very interesting reading. First, the population has grown by more than expected. There are now 4.76m people living in Ireland. Second, there are 2m residential dwellings in Ireland, an increase of 8,800. Third, and perhaps most notably, the average household size has increased. This is a reversal of a long-term trend of a decline in average household size.
Clearly, the demand for housing has grown by significantly more than supply. The market has adjusted by simply increasing the number of people living in many dwellings. This is clearly not a good solution for a modern successful economy.
The shortage of supply is perhaps most notable in the private rented sector. In 2011, there were 305,377 occupied households living in private rented accommodation. During the same month, Daft.ie had 18,690 properties advertised to let. It would be impossible to determine what market share Daft.ie had at that time, but let's assume, for argument's sake, it is 50pc. That would suggest that there were 37,380 rented units available in April 2011. This is not an unreasonable figure, as it represents 16pc of the vacant stock.
By 2016, there were 309,728 occupied households in private rented accommodation. However, there were only 3,950 units advertised on Daft.ie. Under the same assumptions, this suggests a total stock of 317,628. As such, the available rental stock has fallen by approximately 25,000 units.
This stock issue is supported by our analysis of vendor and purchaser trends. Typically, for every new investor buying into the market, two vendors were exiting. This is the greatest challenge for the market. It's essential that the stock of rental accomodation is increased if we are to provide choice to tenants and stabilise rental inflation.
Finally, perhaps the most intriguing data in Census 2016 is what is missing. After the release of the 2011 Census data, much was said of the 230,000 vacant units. Some commentators even suggested that it would take decades for the market to absorb this stock. Those of us who disagreed were scorned. The latest Census figures reveal a decline in vacant stock to 183,000 units. However, we still know little about this stock.
An analysis of enumerators' notes does give a little insight into a sample of this data, but we do need a much more comprehensive analysis.
It is only by gathering and analysing quality data that policymakers can properly plan and legislate for a future stable housing market. Perhaps if this had been available five years ago, we would have a very different market today.
Marian Finnegan is a director and chief economist with Sherry FitzGerald