Housing research programme
This 3 year research programme examines the factors that will drive and shape the residential property market over the medium term. It is intended that the programme will cover a broad range of factors including housing demand, supply and affordability. This research is funded by the Department of Housing, Planning and Local Government. To maximise the benefits of the different areas of expertise and to ensure close linkage between the research and policy objectives, many of the projects have involved collaboration between researchers from the ESRI and members of the Department. In June 2018, to showcase the research activities undertaken as part of the programme, the ESRI and the Department organised a conference entitled “Exploring Developments in the Irish Housing and Mortgage Market”. The keynote address at the conference was provided by Eoghan Murphy, Minister for Housing, Planning and Local Government.
The range of topics investigated in the first year of the research programme include:
The pace at which Irish house prices have grown since 2013 has surprised many observers. The Irish housing market was one of the most affected across the OECD after the international financial downturn of 2007/2008. However since 2013 prices have increased by 50 per cent with recent house price inflation showing no signs of abating. The performance of the housing market currently very much reflects developments in the real economy with Ireland’s strong recovery in macroeconomic terms post-2013 resulting in falling unemployment and growing income levels, all set against the backdrop of persistently low Euro Area interest rates. In this research, using a variety of approaches, recent developments in house prices are appraised; in particular, the sustainability or otherwise of current prices is evaluated and cross-country comparisons are also drawn. The unifying conclusion which emerges is that, given Ireland’s expected strong economic performance over the next five years, the domestic market, in the absence of a significant supply response, looks set to experience consistently rising house prices over the medium term.
This research examines housing affordability in Ireland by looking at the distribution of housing costs across households. Using microdata from the SILC survey over the period 2005-2015, the research considers the trends in the cost of housing in Ireland across groups of households split by age, region, household structure, and their position in the income distribution. We then apply selected international housing affordability definitions and explore the share, and composition, of households in Ireland that would be captured by these definitions. We do not find evidence of universal affordability difficulties in the Irish market. However, certain groups do face acute affordability challenges. Finally, working towards a definition of housing cost affordability for use in Irish policy discussions, the research provides some guidance as to what such a definition could look like.
This research traces the evolution of state support for low-income housing since the start of the millennium. It notes, in particular, the increased reliance on the private sector to supply rented housing to low-income households. Given this reliance, it is important to investigate the adequacy of the quality of this accommodation. The research draws on SILC data to examine recent changes in the quality of housing available to renters and purchasers, focusing on physical aspects of the dwelling.
The range of topics for the second year of the research programme include:
Regional Housing Market Modelling
Following the national focus of the work completed as part of the first year of the programme, the work in this stream takes a regional perspective. This regional research stream focuses on three aspects: (1) house price sustainability at a regional level; (2) an exploration of county level house price affordability; and (3) modelling and forecasting county level house prices.
Tenure Choice and Affordability
The research in this stream builds on the housing affordability work completed as part of the first year of the programme. This work explores the consequences of affordability shocks and how this may lead to an increased risk of households missing payments or suffering an adverse event. A further step is to build a model which links these identities and allows households to move between housing tenure (rental market, owner occupier, mortgaged household, local authority tenant) given the relative affordability and access to the market. The model will be able to look at the joint decisions of housing tenure, relative affordability and any risks that would arise.