Wednesday 21 August 2019

We need more apartments, not more housing estates

Homelessness is rising amid a glut of family homes. Ronan Lyons calls for a major revamp to tackle the crisis

RISING DEMAND: More city apartments are needed
RISING DEMAND: More city apartments are needed

Ronan Lyons

The housing woes of Ireland - and Dublin in particular - are well documented and largely well understood. There are few who think we are fighting the last war. As the data firm ESRI said last week, the housing market is not undergoing the kind of credit-fuelled bubble that afflicted it in the early 2000s.

Nonetheless, just because it is not a bubble doesn't mean that it's a healthy housing market. It is far from it.

Official figures published last week confirm that the stock of dwellings has been largely stagnant over the past decade. While this may have made sense for the period 2007-2012 - when the country as a whole had too much, rather than too little, housing - the lack of new housing supply over the last five years has cost the country.

There are a number of elements to this.

Probably the most visible cost to society is rising homelessness - especially of lower-income families.

Another long-term consequence is the repercussions that the shortage of housing is having on competitive pricing, especially in Dublin.

The American Chamber of Commerce recently published a report that I was involved in which highlighted the challenges as they seek to expand and create jobs in the city.

But I was involved in another report, for Activate Capital, a financier of developers joint-funded by the taxpayer through the Ireland Strategic Investment Fund (ISIF).

The study found that the bulk of the homes being built are not of the kind required.

There are significantly more family homes in Ireland than there are families. In fact, there are 25pc too many, when you compare the 700,000 families in Ireland with the 900,000 dwellings available.

It's not even a problem in the greater Dublin area, where the figures reveal a 10pc surplus.

The problem area is a shortage of apartments, or homes for one-to-two persons, and not for three or four-bedroom properties.

The term "apartment" is a bit narrow. Ireland's estimated shortage of 500,000 apartments includes medium-to-high rise apartments in urban cores for young professionals - and low-to-medium rise suburban flats for empty-nesters.

But Ireland's 'missing homes' also include tens of thousands of purpose-built student accommodation and co-living space for key workers and young professionals.

It also includes a similar shortage in our largely non-existent 'independent living' and 'assisted living' sectors for the country's older residents.

These half a million missing homes represent a backlog - but it is not even a simple matter of meeting this and then returning to 'business as usual' and building lots of family houses.

When it comes to Ireland's demographics, the outlook for the rest of the century will be driven by three main forces: population growth, urbanisation and falling household size.

Unlike any other European country, Ireland will experience faster population growth in the 21st century than in either the 19th or 20th.

For the century and a half to 1990, Ireland typically lost 5pc of its population each decade. During the 21st century, the country will gain 5pc. Every other European country is experiencing a slowdown.

You could argue that, since the Famine, the country has been a late bloomer, not only in terms of living standards but also population densities. This argument holds true for urbanisation. Ireland is now roughly as urban as the typical western European country was 50 years ago. Over the next half-century, the country will go from 65pc to 80pc or more urban.

And lastly, there is household size. Once again, we are behind the curve.

All European countries are on a journey from four persons or more in the typical household to just two, or maybe slightly above.

Ireland remains well above our peers, with 2.8 persons in the typical household, but this number has been falling steadily since the 1960s. It will continue to fall in the coming decades.

Combine these three factors and by 2080, you have a population of perhaps 6.3 million in Ireland, 80pc or more of whom are living in the cities and with the majority of households comprising one or two persons. This is not a recipe for strong demand for housing estates even further out from our urban cores.

This is a recipe for building hundreds of apartments - of whatever type - in Dublin and throughout the country, every month for decades. Just taking Dublin alone, the city will need in rough terms 2,500 apartment blocks with an average of 200 flats built over the next half-century.

With this great a need for apartments, it certainly seems perverse of local authorities to favour commercial - especially office space - over residential use.

And it also seems odd to choose new family estates when the city has an abundance of them already and when people are crying out for apartments.

Given this stark background, it would be prudent for Dublin's four local authorities to come together and agree a long-term programme for housing.

It also seems wise to make apartments, not larger houses, the priority for Dublin inside the M50.

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

Sunday Independent

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