Housing crisis stems from apartment shortage, economist claims

‘Huge shortage’ in supply of apartments behind current crisis, says Ronan Lyons

Economist Ronan Lyons estimates that Ireland has about 500,000 less apartments than it should have for the size of its population.

Economist Ronan Lyons estimates that Ireland has about 500,000 less apartments than it should have for the size of its population.

 

The State’s housing crisis stems from a shortage of apartments, not houses, economist and author of the Daft.ie report Ronan Lyons has claimed.

The distinction, he said, was crucial to understanding the severity of the current problem.

In an address to the 40th annual Dublin Economics Workshop conference in Wexford, Dr Lyons said Ireland had a surplus of three- to five-person dwellings, both in Dublin and in the rest of the country.

However, there was a “huge shortage” in the supply of one- and two-bedroom apartments, he said.

In other European countries, apartments typically account for 30-50 per cent of the housing stock, but in Ireland they account for just 10 per cent, Dr Lyons said.

“So we’re a complete outlier. The only comparable economy is the Shetland Islands, and even there they have about 50 per cent more apartments, on a per-capita basis, than we do.”

Dr Lyons estimates that Ireland has about 500,000 fewer apartments than it should have for the size of its population, and that the apartment shortfall is the single biggest factor driving the current crisis.

“Why is it we’re so bad? The best answer I can think of is that most of Europe got to grips with how to build apartments after World War II. They were rebuilding the cities and they had rapid population growth,” he said.

“In contrast, Ireland, from the 1840s to the 1980s, had, more or less, a stable or falling population, so it never had that pressure to build apartments. If there was any pressure, it was basically to build suburban homes for people moving from the farms into the cities,” Dr Lyons said.

Population projections

From the 1990s and out to 2080, the population projections from Eurostat suggest all the growth is going to be in one- and two-person households, he said.

“We have this unique demographic position. Most countries are seeing a population growth slowdown in the 21st century,” he said.

“We’re seeing the opposite and that’s why the lack of apartment building over the last 20 years is very worrying, because we’ll need apartments not just to address the backlog but to supply demand for the next 60 years,” he said.

When compared with cities such as Toronto and Brisbane, the most noticeable thing about Dublin was how low the skyline is, Dr Lyons said.

“These cities, which are roughly comparable in size to Dublin, have concentrated central business districts with perhaps 50 20-storey buildings.”

Dublin City Council has been against this type of building, especially in the historic core, he said.

“We’ve definitely missed a trick down along the docks. Everything that was build up since the late 1980s, from the Custom House out to the port, is far too low.”

A big challenge was how to reconcile the democratic will of the people with the State’s future housing needs, he said.

“If you have a local council and it’s the will of the local people not to build tall, how do you marry that with the negative consequences for the next generation, who want to live in that area. That’s a challenge in a democracy,” Dr Lyons said.

His solution is for the Government to estimate the future demand for each type of housing and then force the various local authorities to allocate the space for it.