To Build 25,000 Or To Build 12,500

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Dr Kieran McQuinn who published a paper this morning for the ESRI, claiming houses could be undervalued up to anywhere between 12 and 27% 

Yesterday, the ESRI published a paper called Projected Population Change and Housing Demand: A County Level Analysis by Edgar Morgenroth.

Reporting on the paper, yesterday’s Irish Times said:

From 2011 to 2021 an additional 180,000 households across the State will need somewhere to live. The current oversupply of houses in vacant or “ghost estates” will be able to accommodate about half that number, leaving a need for 90,000 houses or apartments to be built between 2011 and 2021, or an average of 12,500 each year.

Almost 60,000 houses needed in Dublin by 2021 (Irish Times)

Today, Dr Kieran McQuinn published his academic paper, entitled Bubble, Bubble Toil and Trouble? An Assessment of the Irish Housing Market for the ESRI.

On Dr McQuinn’s report, today’s Irish Times says:

The ESRI predicts real Irish house prices will grow by a further 8 per cent this year and by 9 per cent in 2015, before moderating to growth rates of 4.9 per cent and 3.9 per cent in 2016 and 2017. Population growth alone will require about 25,000 houses to be built annually, it said, whereas only 15,000 are projected to be built next year.

The report’s author, Kieran McQuinn, dismissed any suggestion that the recent level of price growth constituted another bubble. He said the stock of mortgage credit is still falling while the level of transactions was still registering negative growth. But he did warn that a prolonged period of sustained price growth could turn it into a bubble.

ESRI says house prices 27% below real value (Irish Times)

Anyone?

H/T: Rob Kitchin

18 thoughts on “To Build 25,000 Or To Build 12,500

  1. octo

    Isn’t your conundrum answered in the introduction? Ghost estates can supply half the 25,000 houses required.

    1. ahjayzis

      Yes, if you’d like to explain to the people house hunting in Dublin that their house in Leitrim is almost habitable, go to it.

      1. jungleman

        Don’t worry. Last week RTE news told us that the rising prices in Dublin would bring people out of negative equity, thus freeing up supply in Dublin. Problem solved! You just need to be filthy rich is all.

  2. Nilbert

    “But he did warn that a prolonged period of sustained price growth could turn it into a bubble.” No shit Sherlock.

    Economists, still predicting what happened 5 years ago, and getting it wrong/

      1. Walter Bishop

        Don’t worry-it’ll be different this time. As usual government policy is to dangle increasing property prices in front of us as a measure of increasing economic confidence. Yet at the same time they tighten up every possible escape route for disposable earnings in the name of austerity. When will they learn that selling houses to each other is NOT a viable basis for a domestic economy?

    1. martco

      I agree
      there’s been a steady flow of positive (well from one angle anyhow) spin coming online now for some months now…spot the FG/LAB sponsored horseshit so so obvious jesus

  3. Bob

    McQuinn appears to be basing that on the house price to disposable income ratio. Ireland is about 0.65 (almost half the pre-crash level), whereas the UK is above 0.90, only about 0.15 below 2006.

    As he says in the report “This is not to say that increasing house prices are either inevitable or desirable. Indeed as the economy continues to emerge from the recent recession, keeping key cost of living factors such as housing affordable is imperative as the economy seeks to maintain the competitiveness advantage that has been gained in recent times. “

    So there.

  4. Jock

    Publics jobs is currently advertising a maths lecturing job, PhD needed along with teaching experience. Starting salary is 35k.

    This is what faces people in their 20s and 30s now. The money isn’t there and won’t be for a long time to genuinely support current house prices.

    1. jungleman

      And yet ESRI says the houses are undervalued by 27%. Maybe the houses aren’t meant for the Irish anymore.

  5. tim

    Irish house prices or Dublin house prices?

    Some good deals to be had around the country, not in Dublin though. Plus usually no mention that many of these houses going for €600,000 plus were shoddily built, 40 or sometimes 50+ years ago, and other than having the right address, if you actually wanted to bring the physical condition of the buildings themselves up to a high standard, you’ld have to throw some serious money into them (which no-one will have after forking out that kind of money to buy it in the first place).

  6. 15 cents

    great to see loads was learned fromt he last crash. like all previous governents, this one is getting greedy. its also evident in how we are ahead of budget yet they wont be giving any tax back next budget, just a freeze, which means nothing.

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