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Thread: Demographic Influences on the Housing Market

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    Politics.ie Member Dreaded_Estate's Avatar
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    Default Demographic Influences on the Housing Market

    Another post from irisheconomy.ie on demographics.
    Looks like the "strong fundamentals" underlying the property market are disappearing.

    The Irish Economy Blog Archive Demographic Influences on the Housing Market

    The actual change in the number of households over the four-year period 2002-2006 is also shown. All figures are annualised for comparative purposes.

    The projections show the growth in the total number of households halving from 45,000 a year between 2002 and 2006 to a fairly steady 20,000+ between 2006 and 2021. This reflects the replacement of exceptionally high net immigration between 2002-06 with the assumption of zero net migration after 2006 as well as the impact of the fall in the birth rate in the 1980s on the numbers entering the 25-44 age groups after 2006.

    Optimists might take comfort from the projection of a continued net increase of 20,000 - 25,000 a year in the number of households after 2006. However, if we dig deeper and look at the projected change in the number of households by age of the head of households (or what is now called the ‘reference person’) the picture becomes less assuring (Figure 2).

    What we now see is that the change in the number of households headed by individuals aged under 45 years (what might loosely be identified as potential ‘first time buyers’) collapses from 24,000 a year in 2002-06 to minus 6,000 in 2016-21. On the other hand, the number of households headed by individuals aged 45-64 (’trader-uppers’?) drops from 16,000 a year to around 11,000 a year after 2006. Finally, the number of households headed by an individual aged 65 or over (‘downsizers’?) trebles from 5,000 to 15,000 a year.

    We might wish to concentrate on the projection of households headed by individuals aged 20-44 as being most relevant to the demand for (new) housing. The dramatic reduction in the projected number of households headed by individuals in this age group is a simple reflection of the fact that the underlying projected population falls from 715.6 thousand in 2006 to 521.8 thousand in 2021. This in turn reflects the falling number of births recorded during the 1980s and the first half of the 1990s. If the zero net migration assumption used in these projections were to be replaced by a more pessimistic assumption, the result would of course be an even sharper fall in the projected number of young households. Thus on any reasonable set of assumptions the demand for housing emanating from a key demographic group is likely to weaken considerably over the coming decade.

    The accelerating increase in the number of households headed by individuals aged 65 and over will not compensate for the decline in the number of younger households. Some of the older households will presumably be interested in smaller, easier-to-maintain units while freeing up the larger houses they now occupy. This will support a demand for apartments and dwelling suited to the elderly, but its net effect on the demand for housing units will be negative.


    Thus our “strong demographic fundamentals” seem to have evaporated quite rapidly. The implications for the “long run economic value” of our housing stock are negative.


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    (In dazed hypnotic trance like voice) But our Minister for Finance told us the property market had bottomed, he told us everything is going to be ok.......
    “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” - Friedrich A. Hayek

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    Quote Originally Posted by Cassandra Syndrome View Post
    (In dazed hypnotic trance like voice) But our Minister for Finance told us the property market had bottomed, he told us everything is going to be ok.......
    Oh good! Who needs that stinky old Reality anyway? It's been such a bring-down lately!

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    Politics.ie Member HarshBuzz's Avatar
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    Quote Originally Posted by Cassandra Syndrome View Post
    (In dazed hypnotic trance like voice) But our Minister for Finance told us the property market had bottomed, he told us everything is going to be ok.......
    he also said there were no issues in the Irish banking sector and no prospect of a banking crisis (listen from 51 mins in)
    “'retail deposit flight, I don't see that as a great danger. Ireland is an island” - Brian Lenihan - to hundreds of international investors

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    Politics.ie Member Socratus O' Pericles's Avatar
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    Quote Originally Posted by Cassandra Syndrome View Post
    (In dazed hypnotic trance like voice) But our Minister for Finance told us the property market had bottomed, he told us everything is going to be ok.......
    I miss old Cass, well lenny was right if tardy, it did bottom out--and now it appears to be coming back again, cyclical economics, innit?

    https://www.rte.ie/news/ireland/2017..._house_prices/

    ..........we'll be beyond 2006 prices then.
    The truth of an idea is not a stagnant property inherent in it. Truth happens to an idea. It becomes true, is made true by events.

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    Politics.ie Member mr_anderson's Avatar
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    Quote Originally Posted by Socratus O' Pericles View Post
    I miss old Cass, well lenny was right if tardy, it did bottom out--and now it appears to be coming back again, cyclical economics, innit?

    https://www.rte.ie/news/ireland/2017..._house_prices/

    ..........we'll be beyond 2006 prices then.

    It bottomed out, but not until 2012/3.
    Dead Lenny was trying nothing more than to hoodwink people in 2009.

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    Politics.ie Member Socratus O' Pericles's Avatar
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    Population rising steadily tho'.
    The truth of an idea is not a stagnant property inherent in it. Truth happens to an idea. It becomes true, is made true by events.

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    Politics.ie Member hammer's Avatar
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    Financial Statement (Minister's Speech)

    A good read if you have the time.

    "We have turned the corner"

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    Politics.ie Member mr_anderson's Avatar
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    Quote Originally Posted by Socratus O' Pericles View Post
    Population rising steadily tho'.

    Indeed.
    However the inexorable increase in demand for social housing shows it may not be in the most productive areas.

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    Politics.ie Member statsman's Avatar
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    Quote Originally Posted by Socratus O' Pericles View Post
    I miss old Cass, well lenny was right if tardy, it did bottom out--and now it appears to be coming back again, cyclical economics, innit?

    https://www.rte.ie/news/ireland/2017..._house_prices/

    ..........we'll be beyond 2006 prices then.
    Miss is a very strong word.
    Put a thief among honest men and they will eventually relieve him of his watch. Flann O'Brien

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