The cost of housing is undoubtedly one of the dominant themes in this election. But few are taking an objective, data-driven approach to this cause. On the left, the focus is on things like “vulture funds”, despite the fact that there is very little evidence that the ability of private equity funds to buy houses in a country has any significant impact on affordability. On the other side of the aisle, and FFG on the other, the focus is on taking taxpayers’ money and solving the problem and hoping people will stop. Also a very bad approach.Let’s take a look at the details. First of all, are houses in Ireland expensive, and if so, how expensive, and when did that happen?

The answer: yes. House prices in Ireland are expensive.

Ireland spends the fourth highest amount in the OECD, relative to our income, on housing. Only Denmark, Finland and Slovakia spend more. It is also worth mentioning here that this was not always the case. In 2007, we were below both the OECD and EU averages!In fact, according to the OECD, the house price ratio in Ireland is at a 64% increase from 2015, compared to 15% in the Eurozone. So something has been going wrong in Ireland, especially in the last 10 years or so, which has caused our house prices to suffer in a very short period of time.

This brings me to my next piece of data:

As can be seen here, the number of dwellings in Ireland per 1,000 people has fallen more than any other developed nation in the last 10 years. Our number of premises per person decreased by around 5%. In fact there are few countries with a decreasing number of dwellings per person. The Anglosphere is more or less stagnant, while the Eurozone is growing by a few percent per year. Seeing this, it is not surprising that Ireland’s house price to income ratio has risen by 65% ​​over the past decade, while the Eurozone has only increased by 15%. The reason is that the housing stock per capita is growing in the Eurozone, while in Ireland, it is decreasing.

That brings us to the next question. Why is the housing stock per capita shrinking in Ireland? Are we demolishing houses? What is going on?
Well, we’re not demolishing houses. In fact we are building a lot of them.

In fact, between 2015 and 2023, we about 150k new houses built. That works out at around 19,000 new homes per year, or around 3.8 homes per year per 1000 population on average over the last 8 years. And in 2023, the number is even higher. So what’s going on? Is this not enough houses? Are those countries in the eurozone taking more than us?

As a matter of fact, no! Indeed Ireland builds more houses than any other European country, relative to population size!

Dublin, 11 June 2024: The pace of new residential construction in Ireland continues to accelerate according to the latest forecasts from EY-Euroconstruct, with estimates for completions revised up to 36,000 for this year and 41,000 for 2025. Housing completions per 1,000 of the population in Ireland – at 6.9 in 2024 and 7.7 in 2025 – they are expected to be the most strongest among the 19 Euroconstruct European Countries and more than double the overall average (3.3 per 1,000 in 2024 and 3.1 in 2025).

So we are actually building houses at more than twice the European average!To summarize everything so far:

– Irish house prices as a percentage of income are close to the highest in the developed world

-This has not always been the case, and has only happened in the last 10 years or so

-Since 2015, Irish house prices have risen by 64% relative to income, compared to 15% in the Eurozone

-This is probably because the number of dwellings per person in Ireland has decreased by around 5% in the last 10 years, although it has increased by a few percent in most countries in the Eurozone.

-But despite a reduction in the number of dwellings per person… we are building the largest number of houses in any country in Europe, and we are building twice the amount per person of the European average!

So what explains this paradox of building the largest number of houses in Europe, and at the same time the largest reduction of houses per capita?

The answer is of course, immigration.

According to the Irish census, our population has increased from 4.7 million in 2015, to 5.4 million today. That’s an increase of about 700,000, or 15%. Tying this back to the dwellings per capita figures earlier, our population has increased by about 15%, our housing stock has increased by about 10%, and so it has decreased by about 5% on our dwellings per capita.

Of this 700,000 population growth, only 270,000 is due to natural population growth (births minus deaths). Migration accounts for the remaining 430,000, or 61% of our population growth.

In particular, without this immigration, our population would only be 270,000 or an increase of about 6%. Along with the 10% increase in houses, without immigration our dwellings per person would have increased by 4%. A 4% increase in dwellings per capita would be in line with Eurozone countries, and our house prices would be much lower. If Ireland had the same house price to income ratio growth as the Eurozone has over the last 10 years, our house price to income ratio would be 30% lower. Instead of being among the most expensive homes in the world, we would be similar to or below the EU and OECD average.

Our net migration rate is one of the highest in the world. It is twice the size of the UK or USA, 4 times higher than Germany, and 6 times higher than France. Our population is growing rapidly due to the highest migration rates in the world, and as a result, despite building more houses than anyone in Europe, our number of dwellings per person is falling further. faster than any country in the world. Therefore, houses are close to the most expensive in the world, relative to income.

Any discussion of housing or house prices that does not acknowledge immigration as a key driver is misinformed.