Irish Property Market chat II - *read mod note post #1 before posting*

Ok, I'll show you my simple maths, and you can correct the errors.

Population was 5,149,139 in Census 2022

The total stock of habitable permanent housing in Census 2022 was 2,112,121

Housing stock required to house 5,149,139 people:

@ AHS 2.74 - 5,149,139/2.74 = 1,879,247

@ AHS 2.7 - 5,149,139/2.7 = 1,907,088

@ AHS 2.6 - 5,149,139/2.6 = 1,980,438

@ AHS 2.5 - 5,149,139/2.5 = 2,059,655

There's the simple maths, to calculate the deficit you simply subtract the total stock of 2,112,121 from the required stock for the given AHS and that's your answer.

So what is the deficit?

I have assumed that over 2.1 million units there are houses of all different shapes and sizes.

If simple maths can be used based on assumptions to calculate housing requirements in the future, the same simple maths based on known data can be used to calculate housing requirements in the present.

But as I said above the elephant in the room is that this maths shows there is no deficit.

IIf you're confident that there is a deficit and it is simple to calculate it, then what is it?

I am well aware that the government say there is a 250k deficit.

But government opinion is not the same as fundamental facts about housing.

These are driven by housing data and population demographics, neither of which show a deficit, let alone one as high as 250k.

So when the data does not support the narrative, people are assuming the data is wrong rather than narrative. It's a good example of herd mentality.

This exchange is a case a point.

The same simple maths which you presented yourself to reflect housing need in the future - population increase/AHS - does not show a housing need deficit in the present.

When this is pointed out your response is to cite the narrative rather than consider what the data is telling you.

My point is absolutely every you have referenced here, Leo, daft, Social Justice etc is demonstrably contradicted by the underlying data.

But if you're not interested in discussing the underlying data, I guess we can agree to disagree on the fundamental facts of the housing market.

For a start we know it possible to have both a) a record low supply of housing units on the market and b) to have sufficient total housing stock relative to the total population.

We know this is possible because we have counted what is on the market and the total housing and the total pouplation.

To deny it is possible is to claim the data is wrong. Assuming you don't believe the data is wrong, there must another explanation.

For example what is known and well understood in the US as the lock-in effect. This happens when for a variety of reasons people who ordinarily would be expected to sell a house do not so because of specific factors - common in the US because of long term fixed rates, so when rates rise to 5% a homeowner on a 2.5% fixed rate who would otherwise normally trade up decide not to do so in order to keep their low rate.

Generally, the lock-in effect reduces home inventory, which can lead to a rise in housing prices.

In a more typical housing market, first-time buyers purchase less expensive starter homes from people who are upgrading to larger or more expensive homes as they age and, generally, their income grows. When fewer people are willing to sell, that makes it harder for first-time buyers to start up the property ladder and for existing homeowners to upgrade.4 With less supply, prices remain high.

This is self reinforcing, the longer it goes on, the more it clogs up supply, and the more people who own homes who might wish to sell stay put, and extend or renovate in preference to moving.

It started in Ireland as a hangover due to a perfect storm from the cumulative effect of low rate trackers, negative equity, mortgage arrears, lack of repos etc. All of this added up to a huge number of people who ordinarily would have expected to sell their house being unwilling or unable to do so - i.e they were locked in to their current property.

Thus the sale of second hand homes dried up. Initially not the supply because another hangover of the crash was demand alos dried up. Sale is measured by turnover of existing properties which fell though the floor and remains over ten years later at historically low levels.

By the time the demand picked up the lock in effect had clogged up the market, restricting supply of second hand homes, and driving prices up for the few that remained on the market.

Again we know we know these properties exist because they have been counted. We know the turnover is at record low historical rates. We know the circumstances that initially caused people to be stuck in properties for longer than they intended. We know that their is a current boom in extending and renovating from people who are choosing to stay put and improve rather than trade up because they cannot find anything to trade up to. And we know that the sale of second hand homes is at record low rates

All the evidence points to this as a plausible explanation as to why we can have both a) an record low supply of housing units on the market and b) to have sufficient total housing stock relative to the total population.

I am not suggesting we do not need build new houses. I am simply saying that building out projections based on a fictitious deficit of 250k will inevitably lead to oversupply.

Now I have answered your simple question are you prepared to answer this simple question:

How can it be possible that the same simple maths which you presented yourself to reflect housing need in the future - population increase/AHS - does not show a housing need deficit in the present?

If you don't have an answer for that fairly simple question then it would suggest your interpretation of any fundamental facts in the housing market is completely wrong.

The discussion was about whether or not we have a deficit of 250k, and the data shows we clearly do not. Yes you get a different answer on the lower assumed household sizes if you allow for a vacancy %, but it still does not show a deficit. But you already know this.

It is tiresome that every time I post something you wish to derail you accuse me of wanting to bring up vacancy in a roundabout way.

I answered Blut2's question in good faith about the lock in effect, maybe they're interested, maybe they're not, and maybe nobody else is interested, in which case the discussion will fizzle out anyway. If you're not interested why not just put me on ignore?

I agree that insufficient supply on the market will underpin prices, but the point was more that market sentiment is biggest driver of prices rather than fundamentals.

Current market sentiment is there is zero chance of any price falls because we cannot even build enough houses to cover the shortfall from 2022 - i.e 250k - never mind build enough to accommodate the annual population increase.

There is an argument, as demonstrated by the calculations above, that that market sentiment is driven more by a narrative and herd mentality than fundamentals.

I understand it is not a popular argument but to date nobody has contradicted the data. Any attempt to rebut it is simply to cite the narrative - eg Leo said it, or look at daft, etc etc.

But it matters little what is driving the market sentiment, as long the market remains convinced that prices are unable to fall due to the supply imbalance prices will not fall.

That's what is putting a floor on prices. IMO