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.

@TDoC

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.

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?

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.

@JS

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?

@Jagdip

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.

@Jagdip

Gotcha.

@Jagdip
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.

@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.

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.

@ 2pack,

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.

@Gavin Kostick

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.

@ John the Optimist

Thanks for the informative reply.