CBRE have released their latest ViewPoint report, focusing on demographic trends impacting the residential sector of the Irish economy and property market. According to CBRE, new government budgetary measures, as well as actions by the Department of Housing, are going to impact residential development. Some of these include:
Tim MacMahon, Director in the Development & Residential Capital Markets department at CBRE, Ireland said “The progressive stance by the housing minister, Eoghan Murphy, to promote the development of more sustainable residential accommodation is highly supported and expected to bring positive changes to the market, such as delivering more apartments near transit nodes”.
CBRE outlines the demand side of the housing challenge, providing a clear picture of strong demographics in Ireland based on CSO data. The report discusses the change in population from 2011 to 2016, growing by 3.8% during the short time period. For the first time since 2009, net inward migration was positive in 2016, with 15% more immigrants to the state and 6.2% less outward migration, year-over-year.
The four Dublin local authority areas have shown strong growth with the population of Dublin City up 4.8% in the five-year period, South Dublin showing a 5.1% increase, Dun Laoghaire Rathdown showing a 5.3% increase and the population of Fingal increasing by 8.1% in the period. The population of the Greater Dublin Area increased by 5.7% from more than 1.8 million persons in 2011 to more than 1.9 million persons in 2016, now representing more than 40% of Ireland’s population.
Despite the rapid population growth and the large proportion of people now residing in the Greater Dublin Area, housing provision has not kept pace. 4,234 units were completed in 2016 compared to 19,470 in 2006. As a result, rents have increased by an annual average of 11.5% since Q2 2014, and the average house price stands at €353,975 in Dublin compared to a national average of €240,093, according to DAFT.
Although Ireland has been traditionally associated with high levels of homeownership, the proportion of renters is growing. There were 497,111 households renting in 2016, up 4.7% from 2011, bringing the proportion of renters to nearly 30% of the population. Meanwhile, the number of owner-occupied households fell between 2011 and 2016; the overall homeownership rate has dropped to 67.6% from 69.7% during the five-year period.
CBRE also analyses the nature of occupancy in Ireland by age group, showing that the younger cohorts have a higher propensity to rent. Approximately 65% of the Dublin population aged 25 to 39 rented from a private landlord, while 26% within the same age segment own (with the remainder renting from a local authority). Moving higher up in the age segments shows a higher proportion of home-owners, with over half of the age cohort 40 to 54 owning their homes up to 85% for the segment 55 years and above.
The report states that the residential property sector is at a pivotal stage in Ireland, with housing demands growing at a rapid rate due to changing demographics and evolving living preferences. However, it varies by age group, as the various stages of life require different housing needs. For example, singles who are between the ages of 20 and 35 are likely to seek out rental apartments, while couples with children are more inclined to reside in single-family homes that they own.
Read the full report HERE