Three related posts readers of this blog should be interested in.
First, IrelandafterNama show and describe the geographic variation we see within the preliminary Census results (which are here; initial comments on this blog with hat-tipping to JtO here).
Second, the ever-excellent NAMAWineLake gets sociological on us in a fascinating post on growth of household sizes and why we need an extra 17,000 houses a year.
Third, Seamus Coffey thinks about what an extra 100,000 people means for our economic indicators.
26 replies on “Preliminary Census Results Analysed”
Population increase 2006-2011:341,421
Which is divided between:
Natural Increase: ~222,000
Net Inward Migration: ~118,000
However, since probably over 600,000 foreign nationals entered the country between 2006 and 2010, that would mean that in order for no Irish people to have left in the intervening period, just over 80%(~480,000) of the foreign nationals who came in during ~2006-2011 would need to have left already.
Now 50% of the foreign national count is 300,000. So, if you were to assume that less than say 50% of those foreign nationals have left the country, then about 300,000 Irish people would have to have left the country over the last 5 years. Which sounds about right to me, but then, I’m young seeking work abroad, so what would I know.
You can pick other figures of course, but for every 16% of the foreign national count you allow to remain, you’ll have to balance it by having about 100,000 Irish people emigrate.
Or you can assume that the CSO got one or other of these figures wrong. Given the way this country has got its sums wrong over the last 10 years, I’m inclined to suspect them both.
Why do we need even more houses ? – Sweet Jesus MORE HOUSES
If I don’t have the money to live in a seperate home you will not live in a indivdual home.
This is a very spurious economic argument – unless there is a subsidy for such living.
I might like to shack up with a Catherine Zeta Jones and many other men might also – but I suspect most men cannot.
It is simply unattainable due to the high maintenance cost.
Yes we need homes – 17,000 a year based on the last five year period, 24,000 based on the last 25 year period because our household size is shrinking for many reasons.
That’s not the same as saying we need to BUILD NEW homes, because we plainly have an overhang. It just means that alongside population growth and building obsolescence, we will need homes to accommodate a population that is breaking down into smaller household sizes.
Surprising, isn’t it that in the in the past five years, we needed 24,000 new homes per year to cope with population growth and based on household shrinkage in the past 25 years, 24,000 new homes to cope with smaller family units. In other words, shrinking families are just as important to planning housing demand than population growth.
The scope for meeting the ‘need’ for more housing units from the available stock of vacant houses needs to take account of where the surplus is. The vacancy rate is over 30% in Leitrim and just 6% in South Dublin.
Say new housing is needed in South Dublin.
Is it a case of waiting for the invisible hand to do it’s job and tap a few developers on the shoulder, or has the state leanrned anything about housing development that should be implemented now?
well they lashed out housing subsidies when they were not needed so of course they are cutting them back as fast as they can now that a case might be made to maintain them
All the analyses by the various individuals seems excellent to me. Top marks, all round. I hope that they make it to the national media soon, and are not restricted to here. In my initial posts commenting on the census results on Thursday, I posted something similar (but without the detailed figures that they have given) about both the implications for housing demand and the likelihood of upward revisions to the figures for GDP and the number in employment.
Regarding the likelihood of upward revisions to the figures for GDP and the number in employment, perhaps someone could research what the effect was on these figures back in 1979, when the census results similarily revealed that the population was 100,000 greater than estimated pre-census. Just going from memory, I think that the figure for the number in employment was revised up by close to 100,000 also, and the recession that was thought to have occurred in 1975 was revised out of existence. I am not saying that this one will be revised out of existence as the fall in GDP is much greater than in 1975, but I won’t be surprised to see the severity of it being significantly reduced in future revisions.
Regarding NAMAWineLake’s figures, they are, of course, correct. But, the headline is slightly misleading (I’m sure he didn’t intend it so). It kind of suggests that Ireland needs to build 17,000 houses annually. But, I don’t think that this is what he meant (he can correct me if I have misunderstod). What it means is that Ireland needs to build 17,000 houses annually just to cater for falling household size. If the population grows at 1.6% annually (its average between 2006 and 2011), Ireland needs to build another 26,000 houses annually on to of the 17,000. Throw in obsolesence and holiday homes, and the total is up to 50,000 allready. The number of new houses currently being built is 11,000 annually. The surplus is melting away. The best way to reduce unemployment is to get it back up over the next few years to its long-term required rate of 50,000 asap. Do we really need to wait until there is a housing shortage, as there was in the late 1990s, before moving in that direction?
I’m afraid that last Thursday was the beginning of the end for David McWilliams and Morgan Kelly, the day when the tide turned against them. The census results contradict everything that they have been saying. The high rate of new house building that was achieved under the FF-led government has been presented as some sort of corrupt scam organised by FF to enrich their buddies in the construction industry. Au contraire! It is now clear that Ireland has needed a very high rate of new house building for the past two decades. In 1991, there were 1m households in Ireland. In 2011, there are 1.6m households in Ireland. In 2011, there are 1.6m. Throw in obsolesence and holiday homes, and the total requirement between 1991 and 2011 is around 800,000 plus. I don’t have the precise figure to hand, but that number was probably exceeded by a modest amount, hence the surplus by 2006 (that is now melting away). However, as the latest census results demonstrate, forecasting future growth in the number of households is an extremely difficult task, and the number of new houses built between 1991 and 2011 is in the same ballpark as the number we now know were actually required.
The headline on the NWL blog was/is
“Why we need 17,000 extra houses a year (and it’s not to do with population growth or building obsolescence)”
And just to go with you a moment, based on experience in the past 25 years where the average annual fall in household size has been 0.04, we need 24,000 homes per annum just to cope with the segmenting of the population into smaller household sizes – 17,000 per annum was the experience over the past five years.
Secondly we’re building 7-8,000 homes per year. The 15,000 is based on ESB connections and many of these homes were constructed in prior years.
However to depart from what you say, I would expect obsolescence in Ireland to be tiny because (1) the housing stock is so new and (2) we’re a nation of extenders and improvers.
And population growth. We know the population in 2006 and 2011. We know the births and deaths by year. But we have estimates for migration. So annually in each year between 2006 and 2011 we had estimates. And those estimates were wrong. But you can draw any conclusion about this you want, the estimates might have been wrong in 2006/7/8 and right in 2009/10. Or vice versa which would make the estimates even more idiotic looking. All *we know* is we had net inward migration between 2006-2011. So we have 55k of natural growth (equating to 20,000 new homes per annum) and that is likely to bear up and probably increase but as for migration?
I would tend to think that holiday homes are decreasing due to economic difficulties and possibly the NPPR.
So we have 294k vacant homes, estimates of 50-80k holiday homes nd supposedly a long term average vacancy of 120,000 (6% of 2m) so that still leaves an overhang of 100k (33k in ghost estates and 67k in traditional estates, streets and one-off housing).
If we have an overhang of 100k units, mostly in NAMA hands it is far smaller than your average caller to Liveline would estimate. Given where we think the excess is greatest (i.e. Leitrim) is it not likely that supply in the major metro areas is now actually quite tight such that if you had a functioning banking system it might actually clear rapidly.
Would now not be the right time for NAMA to contact Allsops to organise a national sale of distressed properties, funded by a long term mortgage finance product?
CSO figures show 925,000 houses were built between April 1991 and March 2011.
Census data show us that the housing stock increased by 844,000 during that period — so 81,000 houses were “retired”, a rate of 0.35% per annum.
Of the 844,000 net new houses, 681,000 were (net new) occupied dwellings and and 163,000 (net new) vacant dwellings.
So of the housing output during that period, 80% was replacing obsolescence (7%) or meeting new demand (73%) and 20% was in excess of demand.
If house building during the period was too great (and it was), it was only 25% too great … (i.e we only needed 80% of the houses we built / we built 125% of the houses we needed) …
Am I correct with the interpretation as follows?
With a housing requirement at c24k per annum and a current build rate of c8k leaving a current ‘deficit’ of c16k per annum and using your estimate of c100k overhang suggest just over 6 years of current build rates before the market is back in equilibrium (assuming of course the 100k is capable in terms of quality, of supplying the market when the time comes) – all of course based on the population growth, household size and net inward immigration continuing along the paths as observed in the 2006 – 2011 period.
So in 6 years the house supply demand dynamic back to normal levels from here meaning a step in new build in about 4/5 years from now – allowing for normal new build lead time.
In addition those ghost eststes will over the course of the next 5/6 years, based on these estimates, be revived back to life and talk of demolition is wide of the mark – except of course where there is no propsect of jobs ever likely to support the supply on the ground – Leitrim village for instance.
Aaah, I know see what JtO was talking about with ambiguity. To be clear we need 17k more homes per annum just for household segmentation. So if the population stayed the same and there was no obsolescence, we’d need 17,000 homes just to accommodate divorces, co-habiters that lived with their parents, etc etc.
BUT you would normally expect most demand for new housing to come from population growth. Excluding migration, we need some 20,000 homes a year. Now I thought migration was strongly negative at present but I am given pause by the Census results last week. In addition, some new housing will be needed to replace obsolete homes.
So my estimate is that we need 40k homes every year +/- migration and we’re building just over 5k, so the drawdown from vacant stock might be 35k +/- migration. We have, it seems, 200k+ vacant homes which are not holiday homes. The long term average vacancy is 120k. So we still have an overhang which should serve to depress prices and on a national basis, we would still seem to have a few years of stock to absorb national housing needs.
Yes, you’re right that some parts of the country, South Dublin being a good example, it would seem there is practically no overhang which should act to depress prices on a supply:demand basis. However economic conditions, interest rates, affordability etc may still act to reduce prices. But replacement cost should act to support prices.
My apologies. I never meant to suggest for a moment that you were trying to mislead. Quite the opposite. I was referring only to the headline here (“why we need an extra 17,000 houses a year”), which some might think as meaning we need to build only 17,000 a year. But, I went on to say: “I don’t think that this (referring to the heading here) is what he (jagdip) meant.” Which, when reading your blog in full, is clear is not what you meant.
I am very busy today, so can’t do much analysis. But, any chance you (jagdip), with your great expertise, could produce approximate annual figures for the vacany rate between 2006 and 2011?
The census figures only give the vacancy rate for 2006 and 2011. So, it was 15.0% in 2006 and 14.7% in 2011. I have no doubt that these figures are accurate. But, they give a somewhat misleading impression by suggesting that the vacancy rate is only falling slowly. In fact, given that new house completions were almost 90,000 in the year to April 2007, but then fell continuously to around 10,000 in the year to April 2011, even allowing for the fact that the growth in household numbers was most likely greater in in the year to April 2007 than in the year to April 2011, I think it very likely that the vacany rate continue to rise in 2007, 2008 and possibly 2009, peaked at around 17.5% (give or take a bit) sometime around 2009, and has fallen sharply since then to 14.7% in 2011. Obviously, there is a bit of imprecision about this as we don’t have annual figures for the number of households. But, I think it is very likely that the vacancy rate continued to rise sharply for a couple or more years after 2006, before peaking, and then falling sharply in the past couple of years, a fall which is still continuing.
Sorry I just don’t buy it – if I don’t have the money I cannot change my lifestyle.
We can have aspirational demand all we want but if that were the case the roads would be full of Ferraris.
Besides I am aware of numerous apartment complexes that have been almost completed but put on Ice – these units are most suitable for single living and yet these are not coming on the market so as to peserve fictitious prices.
Listening to Tom Parlon on radio now and can’t help thinking we are just pre programmed to build stuff.
Finish off the apartment units that are in central areas yes but lets cool off on the whole building thing for a while.
Tom is comparing construction to farming suggesting that construction and farming are similiar – milk is consumed at a rapid rate yet houses can last for centuries – we can reskill in a hindred years – its not a emergency now.
Anyway the Census figures for central city areas show a decline in population – yet a massive amount of apartments have been built in these areas.
When city centre populations explode again it might be worth a look.
The western world will just have to get used to a world of private deleveraging and public defecits – this will bleed the malinvestment from the system.
Japan despite what many in the city say have done quite well given the scale of private credit malinvestment during the 80s.
It has learned that public defecits are net energy positive rather then the extractive games the banks engage in.
The longer we can prevent banks from lending into this economy the better.
If the ECB will not monetize then we must summon the poltical will to convert credit deposits into goverment money before it is all externalised.
Austerity now is pointless as it just gives more surplus to external actors who we hope we can export or get some tourist revenue from – pathetic
We need to stop the bleeding before we can medicate the patient.
Interesting lecture – poor sound quality but worth the listen
@JtO, no apologies needed at all, and YoB’s comment above makes it clear that there was ambiguity/confusion. So again it’s 17,000 extra homes just to accommodate segmenting households and in addition we will need housing for population growth and obsolescence.
As regards inter-censal vacancy rates, that would require inter-censal population which in turn would require intercensal births (no problem), deaths (no problem) and migration (aaah!). Let’s say inward migration was stronger than previously estimated in 2006-2008 then vacancy rates might possibly have dipped in 2006-2008 and if outward migration was stronger than estimated in 2009-2010 then rates might theoretically have crept back up.
It all depends on what you think has happened with migration by year in the past five years (we have the total but plainly there are issues with the annual totals).
And it is that absence of annual migration figs which would prevent a stab at the annual vacancy rate unless you can supply assumptions, which might make conclusions shaky.
PS the ECB must monetize goverment money not some dirty toilet paper.
There are 4 components in the demand equation.
1. Population increase, yeah right. I think the extra 100k was not noticed 2006-2008 and the mistake carried into later population and migration estimates 🙂
2. Increase in number of single person households, this is irrefutable.
3. The birth rate, unless the family is in a shoebox apartment they need not move, if in a house it has no demand implication.
4. Emigration, I think emigration is form houshold forming cohorts as well as those who have formed a houshold and are extinguishing one to some extent. Mainly male , 20 somethings.
Very interesting stuff. Temporal trends can be easily reversed by economic changes however.
1: The singletons may just stay at home rather than get a new home
2: The new homes in a poor country are paid for by the state and don’t bring the revenues in as they do in good economic times.
Everybody should calm down a bit. Unemployments up, businesses going bust is up, lending is down, house prices at 2001 levels etc.
Our birth rate is high due to a combination of people staying in more and nothing on TV.
I don’t mean to be picky, but most apartments are shoeboxes.
Indeed a lot of housing built over the last 10 years have been starter homes, around the 1000 sq foot mark, terraced, or semi detached with small gardens and where one has to have the bedroom curtains closed for privacy and net curtains on the front to prevent pedestrians on the street knowing what you are watching on the telly.
This type of home is fine for starter couple, single young person, but not sufficient for a growing family.
I wonder will the Co Councils revise their planning laws and reduce the density of housing / acre for the next generation? Probably not, after all sure what do they care.
@ John the Optimist and others
“Regarding the likelihood of upward revisions to the figures for GDP and the number in employment”
I assumed that once the CSO said ‘the GDP for 2010 is X’, that was that. You’re suggesting that that is not that, and GDP and employment figures can be changed.
I’m struggling to find the right question here: What is the methodology by which the CSO (and other reponsible bodies) calculates GDP and employment figures, and how is it that the census can override them? Who would be doing the upwards revising and would it be disputed?
Such figures are revised all the time, as more information comes to light. This is the case in all countries, but the revisions over the years have been much greater in Ireland than in most. Not sure why. Only a couple of weeks ago the GDP figure for Ireland in 2010 was revised up by almost 2 per cent and the GNP figure for Ireland in 2010 was revised up by almost 4 per cent. These were unusually large revisions. But, as far as I know, those revisions had nothing to do with the census, which hadn’t been published then. The revisions resulting from the census are likely to be considerably greater than the normal run-of-the-mill revisions that occur all the time.
Regarding the effect of census figures, immediately after they came out I posted that they would inevitably result in significant upward revision to the figures for the number in employment and to GDP. In his blog commentary, Seamus Coffey definitely seems to agree with this in relation to the figure for the number in employment, but is more cautious than me in relation to the GDP/GNP figures.
The methodology is a lot easier to understand in relation to the figure for the number in employment. To calculate this figure, the CSO doesn’t count everybody in employment each quarter. That would take forever. Instead they do a Quarterly National Household Survey. Think of this as a very large opinion poll of about 20,000 households. When processing this survey, they will calculate the percentage of those surveyed who respond that they are in employment. For simplicity, let’s say its 40 per cent (although its actually higher). If they have separately estimated the population to be 4.5m (again, a round figure for simplicity), then that would mean the number in employment was 40% of 4.5m, or 1.8m. But, then the census comes along and reveals that the population is not the 4.5m they previously thought, but 4.6m (again, a round figure for simplicity). The 40 per cent figure from the Quarterly National Household Survey still stands, but now its 40% of 4.6m, not 40% of 4.5m. And 40% of 4.6m is 1.84m. So, the number in employment would be revised up from 1.8m to 1.84m, i.e. by the same percentage as the population was revised up.
Of course, in reality, it is more complicated than these simple figures. The CSO will have to look at the age-groups to which the extra 100,000 people belong. If they were all under 15 or over 65, there would be virtually no effect on the figure for the number in employment. But, because migration flows are low in these age-groups, it is far more likely that the extra 100,000 people will be found to be in the 15-64 age-group. If so, the upward revision to the figure for the number in employment will be even greater. That was the case when a similar thing occurred in census 1979. I think it is beyond doubt, and agreed by all economists, that the figure for the number in employment will be revised up by a very significant amount as a result of the census revelations.
GDP is something similar, but a lot more complicated and less certain. So, the upward revision to GDP may well be less than that for the number in employment. But, most people, including I think Seamus Coffey, do agree that there will be a significant upward revision to the GDP figure as well. I certainly do.
Regarding your own arts field, I don’t know if you are involved in radio programming or in publishing an arts magazine. If so, your listenership and readership figures will probably have to be revised up as well (although not any magazine sales figure), as there is a lot of similarity between how these are calculated and how the number in employment is calculated.
Who can ever forget NCB 2020 vision, the 2006 report for the “don’t stop thinking about tomorrow” tigers and of course the pope’s children and his spouse’s stepchildren.
“The demographic sources for the ongoing strength of demand
for housing are the continued rise in the population attaining
the age of household formation and immigration. Moreover,
incomes continue to rise and wealth is increasing, leading to
upgrading of the housing stock, reductions in household size
and the acquisition of second homes. In the early 1990s, the
numbers in the over-25 age group began to accelerate (Chart
37) but house completions did not respond immediately. This
may have been because of the effect on the confidence of
builders and purchasers of high interest rates during the 1992
currency crisis. The rest of the 1990s saw housebuilding rise
sharply but still lagging the growth in demand from the
accelerating numbers in the over-25 age group. The shortage
of supply led to sharp house price inflation.
The expectation was that house price inflation would
moderate in the face of the rise in supply and, in fact, in the first
half of 2005 house price inflation ran at an annualized pace not
much above 4%, compared to 11% in 2004. In the second half
of 2005, however, there was a re-acceleration to a 12%
annualized pace. In the four months to January 2006 the pace
was even faster. ****This is not indicative of oversupply***** nor indeed
are data on private rents, which, having declined between late-
2002 and April 2005, began to rise at a 2% year-on-year pace
in August 2005 and accelerated to over 4% year-on-year in
November 2005. ****There is no evidence of speculative building,
since nearly all developments appear to be booked for
purchase prior to commencement*****. To the extent that there is
speculative purchasing, the rise in rents would indicate that
there is no sign of oversupply in the rental market to date,
though some large developments in Central Dublin will be
completed this year.”
@ John the Optimist
Thanks for the informative reply.
Assuming that public finance data is accurate, but GDP is not, then assumptions about tax take, government share of GDP etc may have to be revised too. The idea that the workforce might be significantly larger, but that this does not show up in tax records already is somewhat a cause of concern. Perhaps the estimated size of the black economy will have to be increased?