Tuesday 20 February 2018

Lack of apartments hits home

While Ireland has no shortage of houses, it does have a shortage of apartments. According to the 2016 Census, there are roughly 160,000 more dwellings suitable for three to four persons (ie,
While Ireland has no shortage of houses, it does have a shortage of apartments. According to the 2016 Census, there are roughly 160,000 more dwellings suitable for three to four persons (ie,"houses") than households with three to four persons in Ireland. Photo: Stock

Ronan Lyons

Here's a bold statement: Ireland has no shortage of houses.

This may sound somewhat counter- intuitive as I, and many others, have been arguing for a number of years that the problem is housing supply. But the key distinction here is between housing and houses.

While Ireland has no shortage of houses, it does have a shortage of apartments. According to the 2016 Census, there are roughly 160,000 more dwellings suitable for three to four persons (ie,"houses") than households with three to four persons in Ireland.

Some may think that while this is true in aggregate, the family houses are in the wrong place. But even if we focus on the greater Dublin area, there are 10pc more dwellings for three to four people than households of the same number.

In fact, Ireland has so many family homes without families to live in them that more than 20pc of them have ''unrelated persons'', as the Census so glamorously terms it, cramming into them. The shortage of apartments, in other words dwellings with three to four principal rooms (rather than five to seven), is all the starker given this surplus of houses. Ireland has almost 900,000 households comprising just one or two persons but only 350,000 dwellings of the right size for smaller households. Even allowing for a significant chunk of Ireland's smaller households outside the main cities living in smaller bungalows, rather than apartments, Ireland is roughly 500,000 apartments behind schedule.

This shortage becomes starker again in an international comparison. The apartment rate is the fraction of all dwellings that are in apartments (blocks of three or more dwellings in the same building). Across the EU as a whole, roughly half of all dwellings are apartments. But in Ireland, just 12pc of dwellings are in apartments. The next lowest is Belgium, with almost 30pc.

There is also a perception that Ireland built too much during the Celtic Tiger. Again, this is only partly true. Ireland built far too many one-off dwellings in rural locations. But looking at the period 1996-2015 as a whole, or even any individual year, Ireland never built enough apartments.

In fact, the underbuilding of apartments was probably greater in the Celtic Tiger than in the preceding 50 years. This gets to why Ireland is so poor at building apartments in the first place: it is the only country that had a falling population for most of the century to the 1980s, so it never had to get good at density. Once we finally started to enjoy a growing population - as we entered the 1990s and ever since - we were caught between a rapidly modernising labour market but a housing sector stuck with an out-of-date business model.

One of the main ways we have dealt with this has been to sprawl. One quarter of the working population of Leinster outside Dublin travels to Dublin every day, while half the daytime population in Cork and Galway travel from outside also.

In 2016, more than 230,000 people commuted at least an hour each way. This represents a 30pc increase - in just five years. This is clearly not sustainable.

If Ireland had the same demographic prospects as its neighbours, this would be a passing concern. However, Ireland remains demographically unique. All other European countries are experiencing a population growth slowdown, and in some cases a decline, comparing the 21st century to the 20th. Ireland alone will experience an acceleration in population growth. A comparison of the period 1850-1980 with the expected population growth 2015-2080 is the demographic equivalent of a cold shower.

For the period from the Famine to the 1980s, Ireland lost 5pc of its population on average each decade. Over the coming 65 years, Ireland will add 5pc every decade. This growth - combined with urbanisation and a decline in household size - means the need for apartments is astonishing.

In order to fill the backlog of missing apartments, and to account for future trends, Dublin needs an apartment block of 200 homes opening every week from now until the 2080s. The rest of the country (combined) needs six opening every month. The exact nature of each block will, of course, vary. The country needs purpose-built student accommodation, high-rise urban, low-rise suburban, key worker and co-living developments, and facilities for older residents.

But the scale of the challenge - especially when compared with the existing expertise of our construction sector - is phenomenal. And I have to ask - is Ireland 25 years into a 100-year housing crisis?

Ronan Lyons is assistant professor of economics at Trinity College and author of the Daft.ie reports

Sunday Independent

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