Vacancy Figures Megathread

hometruths

There is another thread on here - Advice (edit: homeowner travelling for 12+ months) - in which the OP seeking advice:

Hi, I'm a home owner (value 400k) with a 25k mortgage. I'm moving soon to work in Europe for one year minimum. I was thinking of renting out the house while I'm away but another piece if me is pondering if I would be better off selling. I'd have a big chunk of cash to invest or just deposit but I'd have nowhere to call home here. 39/m/single with no kids. Any advice if you could put yourself in my position please. Tnx.

Reasonable enough question. Do they rent or sell?

Majority of the advice is don't do either. Keep it and leave it empty. Sure enough three weeks later owner has decided to do just that.

I am not quibbling with the advice or the decision. Conditions such as they are mean that both the advice and the decision are perfectly reasonable and it is probably the best decision the property owner could make.

I'm just highlighting it for the benefit of those who find it impossible to believe the vacancy figures. This is exactly why the figures are so high.

When faced with a decision of what to do with a property that is currently unoccupied for whatever reason, for many people the logical decision is to keep it empty.

AlmightyCushion

I don't think many are doubting the vacancy figures as such. Much of the doubt is about you constantly saying that there is no supply issue as we have more than enough vacant properties to satisfy demand. That is what most of the debate has been about.

DownByTheGarden

https://www.boards.ie/discussion/comment/120949898#Comment_120949898

That is not vacant though is it. That poster was looking for a way to make use of their property by wither earning from it or liquidating it. Since it is so hard to do either of those things in Ireland nowadays, if there is even a chance of them coming back, which lets face it, most of us do come back, then they have decided not to do anything.

It does not mean they wont be back for the odd weekend/holiday. Wont be using the property for post. Wont be letting friends stay there. Wont be getting sick of being abroad and moving back into their house eventually.

There is no evidence that that will be a "vacant" property.

When I worked in Dubai I rented my place. Whenever I came home I stayed with relatives/friends. I would never rent it if I was to work abroad these days as I would never get it back when i needed it. So the property wouldnt have anyone in it but it would still my home in Ireland and very much in use even if nobody was living in it.

hometruths

https://www.boards.ie/discussion/comment/120955005#Comment_120955005

I've come across plenty who are doubting the vacancy figures here and elsewhere.

My claim that there is no supply issue as we have enough vacant properties to satisfy demand is based on, amongst other things, the governments statement in the Vacant Homes Action Plan:

The preliminary findings of Census 2022 provide a figure of 166,752 vacant homes nationwide. This represents 7.8% of the housing stock. Studies suggest a properly functioning housing market will have a base vacancy rate of around 6%.

One of the characteristics of a properly functioning housing market is that supply and demand are broadly in equilibrium.

So if base vacancy rate of 6% is regarded as the level at which the market will have sufficient liquidity to ensure supply and demand are broadly in equilibrium, then the data is telling us that since we have a vacancy rate of 7.8% then we have enough vacant properties to satisfy demand.

Which part of the above argument is incorrect?

DubCount

https://www.boards.ie/discussion/comment/120955349#Comment_120955349

I think there is a difference between supply in theory and supply in practice.

If we could reduce vacancy rates to where they should be in a functioning market, then that would add supply. If we cant access that latent supply, then its existence is meaningless - it only exists in theory, but in practice it may as well not be there.

For me its like the argument around under utilisation of social housing. We have social housing units where one person occupies a 3 bed house. In theory, we could solve homelessness by forcing social housing tenants into property which is an efficient use of housing stock, or forcing social tenants to share properties that are too big for them. In practice, this wont happen, so any extra capacity we have from social housing efficiency is meaningless, as there is no practical way to release it.

hometruths

https://www.boards.ie/discussion/comment/120955908#Comment_120955908

If we could reduce vacancy rates to where they should be in a functioning market, then that would add supply.

We do not need to reduce vacancy to where they should be in a functioning market, they are already above what they should be in a functioning market.

That is the glaring anomaly that we are pretending does not exist. In order to at the very least alleviate the current problems in the market we need to address the reasons our vacancy rates are higher than you'd expect in a functioning market, but clearly we do not have a functioning market.

We're not even trying to address that issue, we're simply ignoring it.

If we cant access that latent supply, then its existence is meaningless - it only exists in theory, but in practice it may as well not be there.

Yes, we have a potential source of supply that is currently not available in practice. But a property that exists, but is vacant, is a lot less theoretical than an as yet unbuilt house.

If existing unused housing stock is meaningless, what does that make some future projected but as yet unbuilt property? But the current narrative says the only solution to our problems is increasing new build supply, there are no other answers.

We can access that latent supply of vacant houses if the political will to do so is there. But for whatever reason currently it is not.

Now that's fine if the electorate are unwilling to support government policies that would ensure that latent supply is better utilised, but let's not pretend it does not exist.

AlmightyCushion

https://www.boards.ie/discussion/comment/120955349#Comment_120955349

That extra 1.8% above the base vacancy rate is about 36,000 give or take. Earlier this year the government said there was a deficit of over 200k houses. Last year we build about 30k units. Last month a housing commision said we needed 62k units a year until 2050.

So how does this extra 36k vacant units solve the housing crisis when we build roughly that every year, when it is only a fraction of the pent up demand we have and when it only covers about a years worth of the deficit in the amount needed between now and 2050?

hometruths

https://www.boards.ie/discussion/comment/120956125#Comment_120956125

You're missing my point.

The extra 1.8% or 36,000 represents oversupply - i.e it is additional stock on top of what is expected to maintain supply/demand equilibrium in a functioning market.

The whole point is the very existence of that 1.8% totally contradicts the idea that we have a deficit of over 200k houses or the idea we need 62k units a year until 2050. So either the CSO data is wrong, or the government and the housing commission is wrong. Which is it?

It's not that this 1.8% is the key to solving the housing crisis, it's that the capacity of 7.8% indicates we should not have a housing crisis.

Now clearly we do have a current housing crisis - so the question is why we have both a vacancy rate of 7.8% and a housing crisis.

The most logical explanation is this:

The base vacancy rate methodology for assessing a functioning housing market assumes that the majority of these are genuinely turnover stock - ie. they are vacantly precisely because they are actually available for sale or rent and between owners or tenants.

This assumption is based on the idea that property owners are incentivised either by risk/reward to keep their properties occupied.

However in Ireland property owners are not incentivised to do so and thus the majority of the vacancies here are not actually available to rent or buy.

Hence we have a high vacancy rate and a dysfunctional housing market.

AlmightyCushion

https://www.boards.ie/discussion/comment/120956343#Comment_120956343

So, what is your point? Simple question, do you think the ~36k units above the 6% vacancy rate are enough to solve the housing crisis?

hometruths

https://www.boards.ie/discussion/comment/120956667#Comment_120956667

Simple answer, yes I do. I certainly have not seen any evidence to the contrary.

Bass Reeves

https://www.boards.ie/discussion/comment/120956343#Comment_120956343

You seem to assume that we will get up above a 95% occupancy rate. That is highly unlikely. Friend did the census last year. He had a rural urban mixture of housing. We had a discussion after the census and this is more or less as I remember it.

He had about 280 houses in his area including part of a small town. His vacancy rate was about 65 houses. Of the sixty houses, 10ish were for sale ( 2 of these were ex rentals.), 12ish were empty private rentals ( 4-6 of which were being refurbished long term projects IHO, one was rat infested, 3 were flats LL were unwilling to rent, one was a granny flat owner was unwilling to rent, one was awaiting tenants, one was an Airbnb), there was about 5-6 empty Council houses, ( 2 were being refurbished after firmer tenants, two were boarded up one was a private house just after a CPO, and in one tenants were empty.

3 houses were empty as owners were in nursing homes, 3-4 more were where the elderly owner had moved in with there family, 2 were abandoned farmhouse in good condition ( about 5-6 more of these were not inhabitable which he did not count). About 6 were temporary empty on the night ( owners on holidays or visiting a friend), there was 2 inherited houses being used for holiday homes. There was another 8-10 houses empty sure to bring in probate or just inherited and owners were not doing anything with them.

There was 4-6 empty units over commercial buildings that in his opinion would never again be used as a housing unit. Then there was another 8-10 long-term empty that. need serious refurbishment.

So there you are 60-70 empty housing units that in theory are available according to you. In reality bar the ones for sale none are available. Maybe if LL had more confidence in the market they would finish refurbishment faster, IHO LA refurbishment of houses leaves houses vacant for 10-15 months with boards up houses taking years to put back into the stock

timmyntc

If the housing market was functional, then that level of vacants would be proof. But the level of vacants alone do not prove a functional market.

If we have such high vacancy, then how do we also have such low volume of sales?

https://www.cso.ie/en/releasesandpublications/ep/p-rppi/residentialpropertypriceindexmay2023/additionalindicators/

volume of house sales has barely increased between 2015 and now, population has increased by 8% in the period 2016-2022. That is not the signs of a functioning housing market.

hometruths

https://www.boards.ie/discussion/comment/120956900#Comment_120956900

If we have such high vacancy, then how do we also have such low volume of sales?

As I mentioned above.

However in Ireland property owners are not incentivised to do so and thus the majority of the vacancies here are not actually available to rent or buy.

That's the problem we need to address.

Everybody keeps saying "Sure these houses might as well not exist if they are not for sale or for rent. They're meaningless."

Nobody is saying "Hang on these houses do actually exist, is there anyway we can get some of these houses available for sale or rent?"

Donald Trump

https://www.boards.ie/discussion/comment/120955331#Comment_120955331

It's difficult to sell a house in Ireland at the minute?

First I heard of it

Of all the things to attribute vacancies to, that one is a bit strange

AlmightyCushion

https://www.boards.ie/discussion/comment/120956946#Comment_120956946

What are you talking about? Plenty of people are saying we need to get these vacant properties back on the market. We just know that even if we did we would still have major issues. They would help but they aren't enough to fix it completely.

hometruths

https://www.boards.ie/discussion/comment/120957044#Comment_120957044

Ok, so you're in the camp that say we need to reduce these vacancy numbers, great, we can agree on that; there are plenty of others that say these properties are meaningless, just see some of the above posts.

So where you and I disagree is they aren't enough to fix things completely.

What are you basing that on? Varadkar's comments that we had a deficit of 250k last year? Or something else?

Donald Trump

https://www.boards.ie/discussion/comment/120957061#Comment_120957061

Vacancy issues will be fixed by building more houses.

If there wasn't such a shortage that people were staying confident that the price of what they own will be more next year than this year even though conditions have otherwise deteriorated relative to where they were, then people sitting on houses and leaving them idle would not happen as much.

Such people might also be put off from renting as they might be going against the terms of a mortgage where they have locked in a nice relatively low fixed rate.

hometruths

https://www.boards.ie/discussion/comment/120957183#Comment_120957183

Vacancy issues will be fixed by building more houses?!

Another Irish solution to an Irish problem!

Donald Trump

https://www.boards.ie/discussion/comment/120957196#Comment_120957196

Yes. In case you aren't aware, there are different levels to the housing issue. Currently there is a massive backlog in terms of people's stages in life. Younger people are living at home until their 30's in many cases. If there were 100k houses made available at actual build cost in the morning, there would be more than enough people to hoover them up. There are many who would take houses but who aren't planning for it right now as it is unrealistic.

The issue that I think you have at the minute with your vacancies is that there is such a shortage that some view houses as commodities. That will reduce when there are enough houses.

You apear to be concluding that the reason for the vacancy rates is that there aren't enough people to use those houses. That is a million miles off

hometruths

https://www.boards.ie/discussion/comment/120957287#Comment_120957287

Talk me through how making 100k new build houses available at build cost in the morning would solve the vacancy problem? I really don't get it, but perhaps I am missing something.

Donald Trump

https://www.boards.ie/discussion/comment/120957321#Comment_120957321

If you built 100k houses in the morning, they would be absorbed, but it would reduce the pressure. If the probability of capital appreciation was lower, and the probability of capital depreciation was higher, less people would hoard houses.

If I gave you and one other person 400k each in the morning and you have no experience in investing, and you put your money into a 1-year deposit and the other person puts it into a house and leaves it vacant, who will likely be in a better position in a year? How about in 10 years? Some people take it for granted that the only way is up. So they will feel better off buying the house as a commodity.

That's for someone to go and buy a house. Not for someone who already has one and has that extra inertia.

hometruths

https://www.boards.ie/discussion/comment/120957503#Comment_120957503

If you built 100k houses in the morning, they would be absorbed, but it would reduce the pressure. If the probability of capital appreciation was lower, and the probability of capital depreciation was higher, less people would hoard houses.

I get this - i.e 100k extra houses on the market, likely to change market sentiment, less likely for prices to go up, less likely to hoard.

What am I wondering about is - if you put 100k houses available in the morning, which would be filled immediately, at say 2.5 people per house (current avg household size is 2.75) that's 250k people who are relocating. 12k of them are homeless, but that still leaves 238,000 people relocating from an existing property.

Are there really that many people still living with their parents etc - i.e not already housed with some independence? If so are there any stats available on this?

For 100k new houses to make a dent in the vacancies there needs to be significantly in excess of 250,000 people whose current housing meets are unmet and keen to relocate.

Bass Reeves

https://www.boards.ie/discussion/comment/120957527#Comment_120957527

What you are failing to understand is demand. The number of young people doing the leaving cert every year is about 65k. The number of deaths is 33k. That adds a latent demand of 32k requiring housing every year.

I know you will come back and say that not all young adults leaving school require housing at that stage, however you have the same metrics for the last 10-20 years and if the do nut require it at 18/19 they are looking for a housing units at some stage in the following ten years. Latent domestic demand is 32k adults needing new houses.

This assumes that all the houses of the deceased are completely habitable and are available for housing. However they probably are not.

Net migration into the country was 61k last year, 11k 2021 and 29k in 2020. I think it's expected to hit 80k this year. If inward migration even averages at 50-60k yearly, it means along with young adults we are looking at about minimum 80k people requiring housing.

However while the present occupancy rate is slightly over 2/ unit the indication is that this number is dropping as more people live by themselves. Even at 2/ unit the demand looks like it's in the 50k units per year for the foreseeable future.

hometruths

https://www.boards.ie/discussion/comment/120958385#Comment_120958385

Of course I understand that if the population is growing, housing demand is also growing. That's blatantly obvious.

But that doesn't answer the query I had in the post you quoted about the effect of 100k new build houses in the morning.

For all the talk of possible future average net inward migration, births, deaths, estimated of household formations and demand forecasts, do you have any idea of how many new units we need right now, to deal with the demand we have right now and fix the problems to get back into a supplu/demand equilibrium?

is it 50k, 100k, 150k? Or what

Bass Reeves

https://www.boards.ie/discussion/comment/120958442#Comment_120958442

Probably in the region of 70-100k houses and then a continuous build of 40-50k/year

The problem is achieving that. In reality you are looking at a build requirement of 50-60k per year for about 7-10 years if the parameters remain the same. It unlikely even with modular housing we could hit that figure.

hometruths

https://www.boards.ie/discussion/comment/120958510#Comment_120958510

And the 70k to 100k estimate to satisfy immediate demand deficit, what are you basing that on, i.e what figures?

Bass Reeves

https://www.boards.ie/discussion/comment/120958523#Comment_120958523

It's an educated guess. We are building nearly 30k units this year and it's nowhere near demand. LL's are renting houses by word of mouth. Even with interest rates increasing its not reducing house prices significantly.

Ya maybe if we could free up supply by getting people to downgrade and by giving people who own a second units the encouragement to rent it.

87% of rental supply is owned by small LL's according to Darragh O Brien this week. But there is no magic bullet.

hometruths

https://www.boards.ie/discussion/comment/120958586#Comment_120958586

The reason I ask is that for all the talk about how many units might be needed in the future to solve the housing crisis, which obviously is always based on subjective forecasts and estimates yet nobody seems to able to calculate what we need right now - i.e what is the deficit we starting tomorrow from?

If we had that figure then of course all future estimates are more meaningful, because we know what the starting point is.

It does seem odd that it is so difficult to calculate given we have existing population data, demographics, housing stock etc,