The Irish Fiscal Advisory Council’s recent Fiscal Assessment Report got a lot of attention for describing the 2024 budget as ‘gimmickry’ (see note below re: link). However, the Council’s examination of our considerable infrastructural deficits got no attention – deficits in health, transport and education infrastructure. We will examine these in a future post. Here, we look at the Council’s examination of our relatively poor housing infrastructure, or housing stock.
The Council collected data on housing stock in 14 EU countries and the UK. They compared the level of housing stock in each country by measuring the number of houses (including apartments) per person aged 15 years and over.
Ireland has the lowest level of housing stock when compared with other high-income EU countries (our peer group). But we would also fall well behind Italy, Spain and Portugal. No doubt other factors will come into play as we lift the hood – age, geographical dispersion, price. But there is strong evidence we don’t have as many dwellings as other countries.
How many houses would we need to build to reach the level in other countries?
If the level of Irish housing stock were to increase to Dutch levels, we would need an additional 150,000 houses. In France, the Irish housing stock would need to increase by nearly 600,000.
These are my own calculations based on the Fiscal Council’s data. The Fiscal Council stated that:
‘To achieve the sample average across countries (for the most recently available year), Ireland would need an additional 170,000 dwellings, equivalent to nearly six years of the level of completions achieved in 2022.’
Even using the Fiscal Council’s more conservative estimate, we’d need an increase of 170,000 dwellings.
Further, the Fiscal Council provides a time series along with housing stock projections out to 2026, using the Government’s own estimates.
The housing stock increased substantially between 2000 and 2008; unsurprisingly as we were building over 50,000 houses per year. However, our stock has fallen since then when measured per adult. The Fiscal Council estimates, using the Government’s projections in Budget 2024, that our hosing stock will essentially stagnate out to 2026 when measured as a proportion of the population.
Our infrastructural deficit in housing has been over a decade in the making. But it is not simply a supply-demand issue. Lorcan Sirr, writing in the Irish Times, succinctly references the issues which have contributed to the hole we have dug ourselves into over the years:
‘For Irish housing, this has meant a preference for deregulation (lower standards); under-resourcing of the State (which currently needs 541 planners and administrative staff); a reliance on the private sector for delivery as the State retreats (about 70 per cent of social housing is delivered by non-State providers); the dilution of public participation and bypassing of local democracy to facilitate the private sector (see the Planning and Development Bill 2023); and low taxation for investors.
‘The results have been predictable: legal challenges, rising homeless numbers, backlogged systems, missed targets, the State struggling to catch up, the increased financialisation of housing, young people who can’t find new homes to buy even if they could afford them – and spin to cover it all up.’
There is a tendency to debate housing as simply one of competing targets; that is, who can build how much in the shortest time. However, without addressing the issues Lorcan highlights, we will be spinning wheels. We may get more housing but it may not be affordable, it may be not be sustainable (suburban sprawl adding to congestion and commute times), it may not anticipate future demographic trends, it may not lead from tenant to ownership.
There are no quick fixes. This a long-term project, requiring a reversal of long-term downward trends and long-term failed policies. We tend to think of capacity in money terms – how much do we need to spend to solve a problem. However, in housing, money is not the problem. Issues regarding labour (do we have enough builders), planning processes, public authorities’ skill base, land availability, etc. are the challenges. This requires an honest conversation with people about the challenges of expanding capacity – in particular, how much we can build in what time-frame.
It’s either that or, as Lorcan quotes Alain Denault, we will get governments carrying out an imitation of work only to produce an illusion of an outcome.
And we know where that leads us.
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[NOTE: Gov.ie has taken over the Irish Fiscal Advisory Council’s website. This is unfortunate. Further, Gov.ie has yet to put up the Council’s December Fiscal Assessment report which was previously available online. A number of researchers believe Gov.ie to be inadequate and confusing, obscuring more than it reveals.[
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