Is there a shortage of new housing in growth areas?
Reports emerging of a shortage of houses for sale in cities and surrounding areas may seem surprising, considering the number of houses that have been built nationally.
But, according to the ESRI, in 2006 the vacancy rate for houses in Dublin was 9.6pc. Fast forward to 2011 and the vacancy rate had dropped to 4.95pc. This is despite the years of recession. The same is true in other growth areas. Kildare saw the vacancy rate for houses drop from 13.4pc in 2006 to 6.7pc in 2011.
In Meath it went from 14.2pc to 7.4pc. Cork City vacancies dropped from 19.3pc to 8pc, Cork County from 33.6pc to 15.3pc, and Galway City from 24.5pc to 8.8pc.
This is partly explained by the increasing numbers of households in private rented accommodation. The percentage in private rentals went from 13.8pc in Dublin in 2006 to 25.1pc in 2011. Cork City went from 15.4pc to 27pc, and Galway City went from 24.9pc to 37.5pc. Similar jumps were seen in Kildare, Meath, Wicklow and Cork County.
Over recent years, potential purchasers have deferred their purchasing and have instead opted to rent. This has resulted in a doubling of the proportion of housing stock that is rented in some areas compared to 2006.
At the same time as this was happening, there has been little or no new construction activity in those growth areas, hence the reason why housing vacancy rate levels have fallen.
In addition, the numbers of households, including families, have increased by between 15,000 and 20,000 a year - a rise which is expcted to continue into the next decade.
To cater for this increase rhe ESRI suggests a need for an additional 15,000-20,000 dwellings annually over the period to 2016, and an additional 25,000 annually in the subsequent five-year period. This assumes net emigration running at 25,000 annually up to 2015, and zero thereafter.
In July 2012, the Department of the Environment Community and Local Government undertook its survey of unfinished housing developments. Contained within the survey was a breakdown of complete new vacant houses and apartments throughout the country. The findings of that survey also help paint a more detailed picture about the market in growth areas.
In all of Dublin a total of 574 vacant new houses were available; again, the detail is important here because there were another 3,870 vacant new apartments also available. The headline figure coming from that is there were 4,444 vacant housing units in the capital. But, if you're looking for a house, there were only 574 new units last July.
The situation wasn't much better in Cork City or Galway City, with 115 and 18 vacant houses available. In Kildare there were 267, Meath had 308, and Wicklow had 100.
According to estate agents, significant numbers of houses and apartments have been rented since the survey was undertaken, so the actual available stock has fallen.
According to Daft.ie, rent inflation in Dublin was 4.9pc in Q4 2012, compared to a fall of 0.5pc in the rest of the country.
Just 2,100 Dublin properties were available to rent on February 1. The only time that there were fewer listings was February to May 2007. There were just under 12,000 properties available to rent nationwide on February 1, the lowest figure since mid 2008.
Add into the equation that only 8,488 housing units were completed in 2012 – the lowest level of residential building on record in this country.
Over 60pc of those were individual builds. Also worth bearing in mind is that in the first 11 months of 2012 only 3,895 new housing units were started nationally – 75pc of which were individual builds.
With such limited new house building taking place in the growth areas, the supply of new houses coming on stream will fall well short of the sustainable demand for new houses.
While lessons of the past show that it is not in anybody's interests that too many houses are built where they are not needed, neither is there any benefit in not having a sustainable supply.
The economy requires a sustainable supply of the type of houses that purchasers require in the right locations. We do not want a shortage of the type of accommodation sought, nor do we want a situation where unsustainable price rises take place due to shortages of new houses.
While there is evidence of increased purchaser activity in areas such as the Greater Dublin and Cork areas, the current level of new house building falls well short of the demand that will arise from natural demographic pressure.
Hubert Fitzpatrick is director, Construction Industry Federation