The number of first-time house buyers is set to accelerate as we move into the next century, according to Marian Finnegan, economist with estate agents DTZ Sherry FitzGerald. She told a seminar in Dublin that by 2006, there would be 892,000 people aged between 25 and 39. By 2016, the number of people in this age bracket would increase to 949,000. Such an acceleration would put further pressure on the demand for homes. Ms Finnegan was addressing 600 delegates at the Foreward seminar in UCD, which was sponsored by The Irish Times and Roadstone.
She said that at the beginning of this decade about 56 per cent of all Dublin houses were purchased by first-time buyers but by 1997, this had fallen to 38 per cent. There was a slight rise in 1998, as a result of the short-term reduction in investor demand. However, recent evidence would suggest that this rise would probably be reversed during this year. The victims of the rapid rise in house inflation were first-time buyers. Dealing with the issue of affordability, Ms Finnegan said she believed that the average industrial wage does not accurately reflect average wage levels in the Dublin market.
She said affordability of houses in Dublin had declined quite considerably over the past two years. In 1994, about 30 per cent of those approved for a mortgage in Dublin had a combined income level of less than £25,000. By 1998, this figure had fallen to 13 per cent. In contrast, 41 per cent of people who were approved for a mortgage in 1998 had an income level of between £35,000 and £50,000. In 1998, the number of households in the country was estimated to be 1.18 million. This was forecast to rise to 1.59 million over the next 12 years. This suggested a rise of 410,000 in the number of households by 2011. About 8,500 obsolete houses were replaced each year between 1981 and 1996.
Ms Finnegan said it will be necessary to maintain the construction momentum of 1998. Last year, 11 houses for every 1,000 people living in Ireland were built. That was almost twice the number of dwellings per 1,000 population built in the US in 1996. It was almost three times the number of houses built in the UK. Between 1990 and 1998, about 28 per cent of all houses completed in Ireland were located in Dublin. A continuation of this trend would suggest a demand for 144,000 homes. This would lead to a 42 per cent increase in the number of households in the Dublin market. Ms Finnegan estimated that there are 6,850 acres of land zoned for housing in the Dublin area, with the local authority breakdown leaving Fingal with 3,400 acres; 1,100 in Dun Laoghaire Rathdown; 2,100 in South County Dublin; and 250 in the city borough.
However, a substantial proportion of this land was not serviced or had inadequate road access. She said that even if there was a 25 per cent increase in the stock of available land and it was all serviced, it would still not be possible to build a sufficient number of houses to maintain the traditional balance of properties in the Dublin market. The infrastructural deficit - roads, rail network, public transport, water and sewerage - was simply too great In the 12 months to March, 1998, planning permission was sought for 15,500 residential units in the greater Dublin area. About 9,000 of these were in Dublin, 2,200 were in Kildare, 3,700 in Meath and 600 in Wicklow. A recent Government study had revealed a potential demand for 210,000 new homes in the greater Dublin area between 1996 and 2011.
In the interim period, 42,000 units were developed, suggesting a demand for a further 168,000 homes over the next 13 years. The pace of this demand was likely to be strongest during the first years, according to an analysis of planning applications. Ms Finnegan said it would be necessary to look for solutions outside the Dublin market.
Interestingly, even though Ireland had one of the lowest densities of people per square mile in Europe (134 people, compared with 920 in England) the population was by no means evenly spread. Dublin had about 29 per cent of the population in an area of only 228,000 acres. This means that 29 per cent of the population live in 1.3 per cent of the land. Given the restrictions on the supply side in Dublin, Ms Finnegan said it was impossible for Dublin city and county to sustain the traditional proportion of this increased demand. The supply restrictions, she said, had already led to many purchasers outside the Dublin market. Between 1990 and 1998, the number of houses completed in counties Meath, Kildare and Wicklow increased by between 317 and 338 per cent. In contrast, the total number of house completions in Dublin rose by only 77 per cent.
Speaking of possible solutions, Hugh Mulcahy of DTZ Piede Consulting in London, suggested extra investment in both physical and social infra-structure to improve access in and out of Dublin to outlying areas. Irish financial institutions were already engaged in such activity in the UK and now, as European funding is reduced, there is an urgent need to develop public/ private partnership in Ireland. Stressing the need for a similar system here, he said joint collaboration between Government and private industry to design, build and operate major infrastructural projects such as roads, bridges and tunnels had been successful in the UK.
Killian O'Higgins, managing director of DTZ Sherry FitzGerald, urged the Government to focus on establishing the conditions and mechanisms in which infrastructure could be delivered. Specifically, the planning process must be changed. There was a need to reconsider how planning worked. High Court appeals, appeals to An Bord Pleanala, public hearings and administrative delays, while all highly democratic, were holding up developments of vital infrastructural projects such as Luas and the Dublin Port Tunnel.
