July 25, 2024 • 63 mins
Kate English from Deloitte succinctly explains the overwhelming amount of data that exist on the need for housing, along with some upcoming demographic trends that really matter. This episode is a must listen if you care about the future of the housing sector. And of course we talk about Taylor Swift.
Some details from the episode:
- Taylor Swift post link: https://www.linkedin.com/posts/kate-english-2a19a9a3_swiftonomics-consumerspending-hospitality-activity-7212476534991765504-LVjR?utm_source=combined_share_message&utm_medium=member_desktop
- https://www.esri.ie/housing
- Deloitte Crane survey: https://www.deloitte.com/ie/en/Industries/financial-services/research/crane-survey.html
- Book recommendation:
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 2 (00:33):
So my name is Kate English.
I am a director and head ofreal estate research at Deloitte
.
I'm a proud Tipperary womanfrom a farming background but
also have a strange but veryreal fear of cows and cattle.
So, delighted my family got outof farming when I was at a very
young age In real estateresearch and, to be honest, it's
(00:55):
a little bit of a world that Ihave fallen into.
Not something that I would haveexpected.
When I finished in secondaryschool and no idea what I wanted
to do, but knew I had a love ofeconomics, so I decided to do a
undergrad in it French andeconomics.
Still, when I finished thatundergrad, had no idea but knew
I was good at economics, wasdoing relatively well at it, so
(01:16):
I decided to continue on with amaster's degree and it was
during that time that I foundthat I really found my home.
And it was during that timethat I found that I really found
my home.
I kind of excelled at it, wonstudent of the year, got to
present my master's thesis at aregional science conference that
year before finishing it andafter that went to the European
Parliament and I was in theDepartment of Finance there
(01:38):
their finance division and Irealised, even though it's
numbers, there's a bigdifference between finance and
economics and it wasn't reallythe home for me.
Came back, got an opportunityfor a role with as a junior
economist and researcher withSherry Fitzgerald, and that is
where my property or real estatejourney began and at the time I
(01:59):
was like I'll do this for ayear, two years max, and of
course, that didn't turn out tobe the case.
I got very sucked in and Ithink, from a research
perspective, what keeps meintrigued and why I am still
here is that there's alwayssomething changing within the
market.
We have a wide range of sectors, from your residential to all
the subsectors within commercialas well, and, I suppose, within
(02:22):
research and economics.
My role is to discover what arethose changes within the data
every six months and not onlywhat are they, but why are they
happening and try and tell thatstory and narrative to people
who don't want to be in theweeds of the data, don't need to
be, but yet need to understandthe narrative and how the market
(02:43):
is evolving, and it's my job todo that.
Speaker 1 (02:45):
That's quite the journey that you went on to
transition across all thosedifferent I was going to say
fields, but then bring you backto the cows.
And we don't want to scare youout of the room, but I mean,
deloitte wouldn't typically beknown as being directly involved
in the real estate.
You know it's not an agent.
(03:05):
Typically, research in realestate comes from real estate
agencies and that's not reallywhat Deloitte does.
So give us a bit of backgroundas to who your main.
You don't have to name yourclients.
But who do you produce theresearch for, or is it rather
just produced in the round tocontribute to data and to policy
insights?
Speaker 2 (03:25):
Yeah.
So I would agree with you whenyou first hear of Deloitte, you
don't think of real estate, youdon't think of property.
I certainly didn't a few yearsago, but actually in reality
they have quite a long historyand track record of delivering
for some of the largestdevelopers and market players
within the market and I supposeit originally would have started
(03:47):
very much so.
In their tax team they havequite a large real estate tax
division that works from both anacquisition side, a development
side, succession planning, andhave quite a large team within
that as well.
It also then developed out alittle bit into the finance team
, and so this would have beenheaded up by a partner, john
Dottie, and really was born outof when we were in the depths of
(04:12):
the recession and there was alot of restructuring work taking
place and essentially trying toaid developers get through that
difficult time.
And as the market evolved, Isuppose that work kind of
changed.
It moved and evolved from theinsolvency side or the
restructuring of balance sheetsinto more doing debt and capital
(04:34):
raises for some of the largerinvestment funds and also
developers within the market,and subsequently then from that
we've evolved into a real estateadvisory team that includes
your chartered surveyors, townplanners, quantity surveyors,
financial modelers so there's asuite of expertise across all
(04:54):
aspects of the life cycle of anasset which, as you said, is
from the outside, you mightn'ttypically think of.
For Deloitte and I thinkResearcher my role within
Deloitte was kind of the finalpiece of that puzzle they're
saying, right well, if we'reacting in every part of the
market and continuing to buildour client base which, as I said
, stems from your developersyou're both large and small
(05:17):
scale domestic developers, butalso international institutions
and investment funds that arelooking at Ireland we need to
ensure that we are solid andconfident of the data that's
feeding into that strategicadvice that we're given.
And that is my role, ourclients or the work that we do.
From a research perspective, itdiffers maybe a little bit from
(05:38):
what you would see from some ofthe commercial agents in that
we don't produce quarterlyreports.
I think there's a lot of themthere and the commercial agents
do a really good job at that.
So it doesn't necessarily helpthe market or the industry by
adding another one to that mix.
What we do is more largerpieces of research a couple of
(05:59):
times a year, be it an outlookreport, a crane survey report
and event that we do, but alsothen, at the same time, more
bespoke pieces of research thata specific client has come to us
with an exam question and wanta more detailed look into, and
that's the type of researchreports that we then produce.
And obviously, like anyresearch team, there is an awful
(06:20):
lot of external engagement aswell, so the research role is
also to be involved in mediaconferences, podcasts or
wherever there are externalforums where the property market
is being spoken about and thatDeloitte has a voice within that
conversation.
Speaker 1 (06:39):
Well, we're grateful that that's the case, so that
you can come on here and you cantalk to us about it.
I did tell you that we weregoing to talk about housing, but
, as you know, the secret, realreason for this podcast is
Taylor Swift, and so I wanted tofollow up on a post I saw that
you made and about Taylor Swift.
(07:00):
You're an economist.
Tell us the truth, taylor Swift.
You're an economist.
Tell us the truth.
Did she really have any impacton the economy, or is it just
kind of propaganda to try andget her to come back?
Speaker 2 (07:10):
You know what it's funny?
We think LinkedIn is seriousand it's there for doing our
posts on the property market,the economy, but that Taylor
Swift post was probably the mostengaged post I've ever had on
LinkedIn.
Speaker 1 (07:22):
We're all secret Swifties.
There's two types of people.
There's people who are fans andpeople who lie about it.
I'm probably in the latter.
Speaker 2 (07:30):
Yeah, the truth is we don't fully know and I'm not
going to give you a figure.
I think we would have seen,actually, quite a lot of
criticism from some of theanalysis that came out from
other countries or jurisdictionstrying to analyse how much she
brought to the economy.
But we do know from certaindata sets out there for example,
looking at the SCOR data,looking at occupancy rates or
(07:50):
average daily room ratesachieved across the hospitality
industry that weekend that itdid perform particularly well.
Occupancy was up over 98%.
And there was also some cardspending data out from the likes
of Bank of Ireland that showedthe volume of consumer spending
that had increased acrossdifferent age brackets, up
anywhere from between 20 and 40percent.
(08:11):
But also, very interestingly,there was a real spike in Dublin
One and it was put down to that.
That is where her officialmerchandise site was was.
So it was people travelling toget the jumpers, the t-shirts,
the hoodies, everything thathave that Ears Tour logo on it.
We're also spending within thatlocality as well.
So she does bring a boost.
(08:32):
But my real point with thatpost was that it's the strong
calendar of events that adds toour economy and let's not get
too bogged down on how much justone event makes you know Right,
because that weekend TaylorSwift played three nights right
in Dublin.
Speaker 1 (08:47):
You had Shania Twain was in Malahide Castle.
Speaker 2 (08:51):
She was we had Green Day on the Thursday.
Speaker 1 (08:54):
Green Day were in Marley Park, there was two
semifinals on for the GAA inCrow Park and there was Pride
was on and Villagers wereplaying in Trinity as well the
same night.
Speaker 2 (09:09):
Yeah, an estimated over 600,000 additional people
to the city for it, which isphenomenal.
Speaker 1 (09:14):
But like you say, people often wonder about
cultural spending and culturalsupport and it seems like a
woolly topic, but it's thosekind of things that actually
drive the economy right.
Speaker 2 (09:24):
They do.
They get people out andspending across all different
aspects.
There was again in some of thatspending data, even a reference
to the increase in spendingwithin beauty on the lead up to
it People getting ready, I think, for the concert and for
everything else that they weregoing to.
But it's essential for oureconomy.
Essential for our economy.
(09:45):
Now, the debate that often liesthere sometimes when you're
trying to estimate the overalleconomic value of these events,
is that a portion of thatspending would already have
happened that weekend, just inanother channel.
But I still think, as aconsumer and you and I are
consumers we need to also beincentivised to go out and spend
and be active over the weekendsand during the weekdays.
So events like these are veryimportant.
Speaker 1 (10:06):
Fun is important, right, it's the main takeaway.
Speaker 2 (10:09):
Life is for living.
Speaker 1 (10:10):
Well, we managed to get through that without once
introducing a pun on any of thelyrics or song titles.
So congratulations there.
We'll probably have to go backto boring things like housing.
So one of the things I wantedto ask you about, because you're
a numbers woman, is numbersright.
We see a lot recently of peopleI call it an arms race to outdo
(10:34):
each other on predictions forhow many houses are needed.
And what strikes me in being inthe industry that I'm in, and
from having done the podcast andeverything, is how little
agreement there is, Despite itbeing such such an important
part.
We can't seem to agree on howmany units are needed.
I'm not a economist, I'm not astatistician, but I would have
(10:57):
thought it's not that difficultfor people to look at
demographic detail and come upwith like a ballpark, like not
exact numbers.
But I've heard in the lastcouple of months people say
30,000, 40,000, 60,000, 80,000,I think a stock broken firm put
out a report saying it was morethan 80,000 per year and it just
(11:20):
seems to me like how couldthere be, you know, such
differing views and how couldyou get to such different
numbers?
And you're going to tell me nowwhy?
Speaker 2 (11:31):
And arms race is definitely one way of viewing it
or framing it.
But I think really what we haveseen over the past year and
really the last six months, andwhy you are seeing those
increasing numbers, and almostit felt like for a stage there
that every week there was a newnumber that was trying to pip
the other and really the reasonfor that was because we've known
(11:53):
for quite a period of time thatour population is expanding at
a much faster pace than had beenpreviously forecasted or
anticipated.
For we had census data.
Our census was due to takeplace in 2020.
It didn't because of COVID, andwe finally got it in 2022.
And after that census, there wasa lag period between the census
(12:16):
data being collected, collated,analysed and our new set of
population forecasts had beengenerated.
And I think during that voidperiod of where we were waiting
for our population forecasts tobe officially updated, it
allowed for a period of version1, 1.2, 1.3 and 1.4 of what
(12:37):
people thought the housingrequirements were going to be.
And it is all based on the factthat we know that our
population was expanding fasterthan what was anticipated, but
no one was fully sure as to whatthose new population forecasts
would be, so it allowed for thiskind of bubbling of the figures
.
But now that we've come pastthat period and we've gotten our
updated population forecastsand we've gotten reports like
(13:00):
the Housing Commission, thosehigher numbers all of a sudden
don't seem all that crazy.
Speaker 1 (13:06):
Yeah, which is the interesting thing to me and
maybe for the lay peopleincluding me, you might explain
the basis of how these estimatesare arrived at.
So if you're looking at CSOdata like population, I guess,
demographics how do you go andbuild an estimate as to how many
(13:27):
houses would be needed to housea given?
Speaker 2 (13:29):
population.
So there's three main variableswithin this, and this is
whether, again, if you look at,for example, an Irish estimation
of this, or else you look at itfrom a European perspective as
well, it's just three samevariables that are used, but
there's slightly differentassumptions behind them,
obviously, depending on thecountry and what those variables
are.
So the first one is ourpopulation growth, which is
(13:52):
arguably maybe one of the mostimportant ones and the one that
has seen the largest amount ofchange since our last estimates
were delivered to the market.
Our second one, then, is theaverage household size, and this
one is also critical and whereIreland, I suppose, of recent
times, has kind of deviated alittle bit in terms of trend.
(14:12):
And that last one is the rateof obsolescence within our
housing stock.
So if we were to break down thethree of those they are your
three indicators If we were tostart with, maybe, population
growth first, because, as I said, it's the largest component and
maybe one of the most importantwhen you think of how a
population grows or decreases,there are again a number of
(14:36):
different indicators within thatOne is your life expectancy
rate, and that influences howmany people we have passing each
year and therefore, leaving ourpopulation figure, we have our
fertility rate, so how manybirths are taking place?
And then the last element is netinward migration.
I think the key takeaways maybefor you and listeners to take
from this is that in those ESRIforecasts that were released
(14:59):
only at the beginning of thissummer, so from a fertility rate
perspective, they're assumingthat there's no real change.
We have seen a decrease in thefertility rate within Ireland
over the past number of years,but we're still seeing a little
bit higher than the EU averageand they're assuming that that
stays the same.
Speaker 1 (15:15):
And that fertility rate.
Is that enough to sustain thepopulation and to grow it, even
if it's a little bit, or is oris it?
You know?
You hear in a lot of Europeancountries that if it wasn't for
inward migration, the populationwould be declining.
Is that true here?
Speaker 2 (15:30):
that's not necessarily true here within
Ireland, because I think we havethat slightly higher fertility
rate.
But at the same time, if wedidn't have net inward migration
at all, I think it would bevery bad for our economy and our
economic growth and wouldcertainly impact those
population figures.
You know our fertility rate.
I think it sits at about 1.63at the moment, which, as I said,
is above that EU average.
(15:52):
But that remaining constantpart, I suppose in one way it
does leave a little bit of aroom for a change in the
forecast in the future.
For if that was to fall wewould have less births, so that
would bring down your youthpopulation.
Speaker 1 (16:05):
But there would be a significant delay to the effect
on the housing market.
For that right.
Speaker 2 (16:12):
Absolutely, whereas the inward migration is sort of
an immediate effect.
It's an immediate effectbecause, when we look at the age
categories of our inwardmigration, it typically is
between that 18 and 44 year oldcategory, which are those
perfect, almost householdformation years.
The life expectancy is expectedto increase.
(16:33):
I don't think that wouldsurprise you.
We are living longer, sothere's no real debate over that
.
It will increase a little bitfurther.
There's a little bit of adifference between male and
female, which has always beenthe case historically.
And then that last component ofthat population growth is, as we
said, that net inward migration, and this is where I think
there was the largest level ofchange from what would have been
(16:56):
previously the estimates, and Ithink what is really key here
to note is that as our economybegan to recover post the
financial crash, there was anexpectation that we and we had
an awful lot of people leave thecountry of Ireland to go work
somewhere else because theycould not get jobs here, and at
the time it was expected thatthat figure would return
(17:18):
positive, meaning more peoplewere entering Ireland rather
than leaving it in about 2016.
And it actually happened a yearearlier at about 5,900 persons
that year still not all thatmuch, but it really ramped up in
2016, 2017 and 2018.
Got up to over 38,000 in 2017and over 44,000 net inward
(17:41):
migration people both in 2017and 2018 and remained constant
at that figure, which was quitesignificant.
And I think that was the changethat people weren't anticipated
.
And there's a little part of methat I look back and I go well
and actually still and I'veheard it at some industry events
this year of is there a littlebit of a narrative or a feeling
(18:03):
within Ireland of where we arealmost afraid to accept that we
are a successful economy in manyways.
We are continuing to grow andthis growth can continue if we
put the policies in place toenable that growth, while there
was a bit of an expectation ofwe'd bounce back, but it
wouldn't stay at these higherlevels, which isn't what has
(18:23):
come through.
Speaker 1 (18:24):
of we'd bounce back, but it wouldn't stay at these
higher levels, which isn't whathas come through.
Yeah, well, it's certainly aparticularly Irish thing to be
only looking for the rain cloudon the horizon, but I suppose we
do also because of being asmall country without really any
indigenous.
You know, high employmentindustry here, right, everything
is, as an island, comes fromabroad.
(18:44):
Even tourism is really moneyfrom abroad.
The technology thing is fromabroad, the pharmaceuticals are
from abroad and there's just thefarming and we won't bring that
up.
So we do kind of have to bekeeping an eye on that.
But it's still interesting tohear how these things are
arrived at.
But I'm just struck by thefigures that you're giving there
(19:05):
.
So 2018, you know, I'm justdoing the sum in my head is
maybe 500 housing units a weekare required that year to keep
pace for the housing stock withthe rise in population, in
population, and we weren't doingthat in 2017, right, and we're
probably doing it now.
But do we know now, like, uh,post pandemic, has the migration
(19:28):
thing turned?
I know we hear a lot in thenews about, about, um, the
international protectionapplicants and that, but that's
actually relatively very smallnumber.
But the, the sort of eumigration, which is what was
primarily driving people in here.
Right, it is for for technologyjobs.
Has that resumed?
Post pandemicpandemic Are weback up at very big numbers
again?
Speaker 2 (19:47):
Yes, it has resumed post-pandemic.
So there was a dip in 2020, butafter 2020, our net inward
migration figures returned quiterapidly once again, and there
is the expectation within theESRI report and also in
subsequent CSO populationestimates that have come out
since then too, which areseparate that have assumed that
(20:08):
our net inward migration wouldremain at an elevated level over
the next few years beforedropping back.
So I think the CSO actuallyhave it that for the next few
years we could be up around75,000 net inward, which is a
lot higher than where we startedat 5,900 in 2016, and even
where we were with over 44,000back in 2017 and 2018.
Speaker 1 (20:29):
Wow, that's that's.
I mean, those are big numbers.
That's kind of amazing and Iwonder.
I mean it's not easy to comehere, right, like, housing costs
are very high We'll get ontothat in a minute but you're
talking about that number ofpeople moving to a small wet
rock in the Atlantic.
I wonder what things would belike if housing was cheap.
(20:49):
You know, would there be100,000 people coming here?
I mean, if we're actually ableto solve infrastructural
problems, are we holding backour economy by not fixing these
things right with housing?
Speaker 2 (21:01):
Yeah, I think and it's been well, I suppose, cited
or plugged on by the likes ofthe IDA or the international
business community here from allthe FDI investment here that
certainly housing is commentedon as a real barrier and a
barrier that's beginning to havea larger impact on investment
(21:23):
decisions.
Now it hasn't led to the casethat we do not have any FDI
investment or increasinginvestment from those large
firms within Ireland.
That simply isn't true, but itcertainly is a component as to
why they may weigh up anotherlocation a lot more now than
what they would have a few yearsago, and I think it is a reason
why we do need to get thisright and try and improve the
(21:45):
situation.
Because we are a small nation,as you have rightly said, a
small open economy, and FDI hasbeen such a critical part of our
growth for the past number ofyears and it's important that we
keep that going.
It's important that we alsoinvest in our SMEs and ensure
that we deliver almost the sameway as we have an FDI, a DDI, a
(22:07):
domestic direct investmentindustry, and ensure that we
continue to grow that.
But we want to be encouragingforeign direct investment here
as well and that the growth ofthose sectors within Ireland.
Speaker 1 (22:18):
Yeah, and, like you say, it hasn't had any impact
yet, but it's.
You know it's a bull market,right, people are expanding
everywhere and it's a little bitlike, you know, running a hotel
during Taylor Swift, right,every hotel room is going to get
sold.
But when it's a wet Wednesday,November, you know it's, it's
only then the guy who'scompeting, who's got the best
(22:39):
product, that's going to havethe room sold.
Speaker 2 (22:41):
Yeah.
Speaker 1 (22:41):
And the sort of terrible hotel with that's cold
and noisy, that room's going tohave the room sold, yeah, and
the sort of terrible hotelthat's cold and noisy, that
room's going to be empty.
And we seem to I think we seemto carry on a little bit with
FDI like that.
That's never going away, thatthey just love us because we're
Irish, which is kind of nonsenseright there here because of the
policy conditions that exist.
Speaker 2 (22:57):
It's not a guarantee.
You need to compete for that,and every nation is competing
for FDI investment, and it'sbeen incredibly valuable to
Ireland.
It's been the backbone of oureconomic growth story, so that's
why we need to ensure that weprotect it, and I suppose the
other part of it is is to ensurethat not only are we attracting
individuals from other nationsto come to Ireland, but that
(23:18):
we're also incentivising a lotof very bright and well-educated
Irish individuals and youngpeople to stay as well.
Speaker 1 (23:27):
Which is a huge thing .
That's oftentimes like a casualand I say that truth is the
first casualty of war but thatwe look at stuff like this and
say, well, the numbers are stillgoing up, so the number of
people coming here are stillgoing up, employment is still
going up, but there's, I wonder,are there any hidden data
points showing that we arelosing people?
(23:48):
I mean, we have high net inwardmigration, but that doesn't
count, it's net, right?
If you're looking at the growthfigures, there are still people
who are emigrating and Irishpeople are still emigrating, and
not insignificant numbers.
Speaker 2 (24:01):
I do think, though I'm a firm believer of that If,
in the morning, we solve thehousing crisis, some young
people would still leave becausethey want to experience the
world out elsewhere as well, andso they should be able to.
Critical part is that they'reincentivized to come back and go
get their experience in London,australia, somewhere in Europe,
wherever it is Canada, theStates but that they come back
(24:23):
and see a way of coming back.
Speaker 1 (24:24):
Bring back the secrets.
Yeah, yeah, we'll, we'll, we'll, we'll get back to that.
One other just point when Iasked you earlier and I forgot,
cause this is something thatgets brought up a lot
dereliction, or you used a nicerword Obsolescence.
Obsolescence Is that.
Is that much of a factor,because I mean, we all see
derelict houses, but is thereenough of that being created
(24:47):
year on year to have any impact,like houses coming out of use,
you would think?
In the current climate, thatwould be brilliant.
Speaker 2 (24:58):
Yeah, so obsolescence is a difficult one for the SRI
and anyone else to get a handleon the rate and the level of it
each year.
Research into it is slightlylimited, and so there's
assumptions around it that it'sa rate of 0.25% of your total
stock each year.
But I suppose the reason whythey are insisting on putting it
in there and I agree with ittoo is that the key for me with
(25:22):
this point is that even if wehad, in a very strange world
where not our population didn'tincrease or decrease by one
person and our age structurestayed exactly the same, even
within that year, we would stillrequire a level of development
activity and delivery of newstock to replace that obsolete
(25:42):
stock.
It's almost the way I describedit to someone else the other
day was you have your pair ofwinter boots, you wear them
throughout the entire winter,you get every penny's worth out
of them, but by the end of theperiod of wearing them there's a
hole in the sole.
The cobbler says I can't repairit, and the following winter
you replace those boots, and youcould almost view that housing
as the same perspective.
We will always have an elementof obsolete stock that will need
(26:05):
to be replaced.
So even if we had no populationgrowth, we had no change in our
age structure, there needs tobe a level of development
activity and I think that'sprobably, I suppose, one of the
items that allowed us to getinto a position where we have
such a high level of unmet orhistoric pent up demand is
(26:26):
because we did go through almosta decade of where there was no
delivery whatsoever, and thatwas always going to hurt at some
stage.
It was just difficult, Isuppose, when you're in the
depths of that very dark periods, to see that if we're not
delivering now, this will hurtus in a few years time.
Speaker 1 (26:43):
And that was another thing I had on my list to ask
you, because that rate ofobsolescence is obviously a
prediction, right?
You're saying certain number ofhouses are going to go, you
know, go out of use every year.
So we have, we make estimates,we make predictions all the time
.
Could we have seen this coming?
Or rather, did we see thiscoming and we said, well, we've
got no money, so we're justgoing to have to let it happen?
Or, you know, was this a shock?
(27:06):
Is there any redemption reallyfor us as a society to not have
done something about thisearlier than we started?
I mean, I would argue thatwe're still not really doing
anything about it, but we canget onto that later.
But you know, did you see itcoming?
Did anyone see it coming?
I know there's going to be alot of Cassanders out there who
(27:27):
said I was this lone voice ofreason, but the data was it very
clear?
This is happening.
You guys need to be building,and we didn't do it.
Speaker 2 (27:35):
Yeah, I think in one way, hindsight is golden, but at
the same time, when you lookback, firstly, I would say, if
you have a decade of absolutelyno delivery back to my
opselessons point, it was alwaysgoing to hurt at some stage and
we saw the impact of that.
The second part is and it'sback to our lovely population
forecast is that in between eachcensus period, there is annual
(27:58):
population estimates that areproduced by the CSO period.
There is annual populationestimates that are produced by
the CSO.
So even when we were waitingfor a revised population
forecast to be released now in2024, we were getting an
indication or a level as towhere our population was growing
and whether it was outpacinggrowth that was expected there
(28:18):
before.
And I think in one way it'suseful to look back at.
If we look at the previousforecasts that were there, so
your population was expected togrow by about 916,000 persons
from the period 2016 to 2040.
(28:39):
And the annual growth rate ofthe population during that time
was expected to be 0.7%, whichwas quite a pullback from where
it was during the period 1966 to2016.
But if we look at thepopulation estimates from 2016
up to 2019, so prior to, or evenup to 2022,.
(29:00):
Just before we got to ourcensus data, those annual
increases were averaging around1.4%, which is much higher than
your 0.7%.
Speaker 1 (29:09):
It's a double.
Speaker 2 (29:10):
Double and we had an additional well over 200,000
people added during just even afour-year period alone.
So there was an indication thatour population was surpassing
what we expected it to be.
And if your population isgrowing at a faster pace than
what you expect and we know thatduring those time periods that
development activity or yourlevel of completions in the
(29:32):
market was still actuallyrelatively low we had gotten
back to doing some form ofdelivery, but still very, very
low levels of delivery it wasgoing to impact at some stage.
And the best way I think ofalmost showing that that
acknowledgement has taken placeis, as I said, over 916,000
people were due to.
(29:52):
The population was due toincrease from 2016 to 2040 by
the year.
So right In their most recentset of forecasts and we now look
at from 2022 to 2040, so,cutting out those six years,
that population is forecasted toincrease by over 922,000 people
, but in a smaller timeframe.
Higher level of net inwardmigration which, from the
(30:12):
feeling of the data at themoment, you could suggest that
base or that high scenario isactually quite likely as well.
We see an increase of well overa million and we're getting to
a population of over six millionby the 2040.
(30:35):
So even within that, we'reseeing that now we're expecting
the level of population growthto happen in a much smaller
period of time, but to even belarger than what it was in a
larger period of time only fouryears ago or six years ago.
Speaker 1 (30:48):
Those numbers are kind of astounding to me.
Speaker 2 (30:51):
Someone did actually push me the other day as well to
go do you think Ireland willget to double digit population
growth?
Let's think here and go, howambitious or realistic do we
need to be?
And there's a little part of mesomewhere that went oh, double
digit population growth, willIreland ever be a 10, 11, 12
million population?
And I was typically I was alittle bit reserved in holding
(31:13):
back from it, but then it's backto the element of well, in one
way, when we're approaching this, I think it's important, going
forward, that we're ambitiousand realistic in terms of what
we can deliver at certain pointsthroughout each year, but that
we're also ambitious andrealistic as to the extent of
growth that Ireland couldpotentially have.
(31:35):
And let's not almost hamstringourselves or hold back that
growth from taking place becausewe don't believe Ireland can
get to that level.
And I think it's also why andthe Housing Commission did a
really good job, I think, ofhighlighting this in their
report that was released in JuneWe've a lot of reports that
have been delivered only in thelast three months.
Speaker 1 (31:54):
Subject of a future episode.
Speaker 2 (31:56):
Yeah to the housing market, but that they made a
very good point of let's ensureactually, that we're not getting
bogged down on just one housingrequirement data each year
figure.
So whether it's that 80,000 orit's the average of 44,000 that
the SRI have now on theirbaseline up to 50, I think 2,000
(32:17):
on an annual basis for theirhigher growth scenario, and
instead that it should be arange so that we're not
constricting ourselves.
Because that's really whathappened on the previous version
when we looked at how the NPF,the National Planning Framework,
was applied down to your localarea plans.
It was quite rigid of each areawas grown to grow by a certain
(32:41):
number and there was no wiggleroom either side of that, which
really limits the growth thatcan potentially happen in each
area.
So it's almost let's not getbogged down in one figure and
ensure we're being that range isboth ambitious and realistic.
Speaker 1 (32:55):
That's a really good point.
There actually was an exampleof this I'm not going to name
the council, where it's notreally the council's fault.
There was a small town andthere was a zoned this land.
It would have been 700 personsand so the I don't know if the
planning regulator actuallystruck it down or whether it was
(33:27):
said you know, you can't zonethe land because it's going to
put you over the limit.
So the difference between 500and 700, so it meant that 100
and something houses didn't getbuilt for the fear that there'd
be 100 more people within anarea, I mean and it's funny that
I the debate that has oftentaken place, um, politically and
(33:48):
otherwise, about, about zoningland and about delivery and
everyone afraid about units.
Um, and I'm cast back to theghost estates.
Remember those when we had allthese houses that we're never
going to fill them?
That was only a few years ago.
Right, these were headlines inthe newspaper to the ghost
estates.
Remember those when we had allthese houses that we're never
going to fill them?
That was only a few years ago.
Right, these were headlines inthe newspaper about the ghost
estates.
And we're the ghost estates now, right?
I mean the simplest way to lowerhousing costs.
(34:08):
Who am I telling an economist?
Supply, demand right, makeloads of them, then they'll get
cheap, and then, when they'recheap, it's good.
Speaker 2 (34:17):
Exactly, and there's also an element of I'm probably
digressing or going back alittle bit to what we were
speaking about earlier but whenwe were looking at those, what
are the three components?
I said your population growth,your obsolescence rate, both of
those which we've spoken about,but also that average household
size, and this is something thatdoes also have an impact on our
(34:38):
requirements for housing, butalso not today, but in the
future.
And why?
Maybe it's not a bad thing thatan additional 100 people or
whatever it is, units aredelivered within a certain area,
because our average householdsize has actually stagnated a
little bit over the last decadeand I think a reason for that,
some of it is due to supply,that there isn't the ability to
(34:59):
form new households because thestock isn't there.
Speaker 1 (35:02):
So this is adults living with their, or kids
living with their parents.
Speaker 2 (35:05):
Yes, so we're sitting at 2.7 persons is our average
household size at the moment.
But again, if we were to assumethat, you know, all remained
equal and we'd no increase inour population growth but the
average household size decreased, it automatically generates a
new portion of households thatwould be formed and therefore
require housing.
(35:26):
And I think it's particularlysay, if we look at if we had an
average household size of fourpersons we don't, we did back in
the 60s and 70s, but we don'tanymore An additional 1.1
million people living in thestate and that's that higher
rate by the ESRI of if we get toover the 6 million population,
that would create an additional281,000 households.
(35:49):
But if that figure is 2.8, thatadditional household rises to
over 400,000.
And if we expect to fall inline with where EU average is,
eu average more so sits betweenI think it's about 2.3 or 2.4 as
the average household size.
If we were to continue to movetowards that trend and you get
(36:09):
where I'm going with this andthat 2.8 was to drop further,
that 400,000 rises even more.
So it's another element of wehave changing households, we
have changing families, we'vechanging dynamics across our
society and I do think thathousehold size figure will
decrease further, or certainlywill, if the supply is there.
(36:30):
So an element of that willsatisfy some of that excess
demand that someone may befearful of as well.
Speaker 1 (36:37):
Yeah, well, certainly no danger of excess supply at
the moment.
I don't think I was going toask you about those demographics
, but you have really answeredthe question ahead of time.
But I do hear that a lot aboutthe trend like reversion back to
the EU and I'm always like theEU now 27 countries and
culturally we're all very, verydifferent and maybe you don't
(36:58):
have this information, but I'dbe kind of curious to know what
the situation in the UK is like,because we culturally as much
as I get shocked for saying this, you know sort of similar-ish
attitudes to things as people inin in the UK Are they having?
And if you don't have theanswer to this, it's fine but
are they having the same kind ofdemographic shift?
(37:21):
Like, is everywhere thehousehold numbers, household
sizes declining?
Is this just like anunavoidable trend?
Speaker 2 (37:29):
In one way, yes, it is an unavoidable trend.
In another way, it's happeninghere in Ireland quicker because
we really sat at the top of theEuropean table.
Say, if we were to throw theaverage out the door and look at
it on a country by countrybasis, ireland sat at the top of
that table for quite a longtime.
We had larger families to beginwith.
(37:49):
That really impacted that andwe were a very different society
back in the 50s, 60s and 70sthan what we are today, and we
were poor as well.
We were poor, so that averagehouse size, as I said, sat above
six back then and we've comedown quite gradually until the
last two census periods.
I think the UK does sit alittle bit lower than where we
do as well.
They're not quite at the EUaverage, but they're certainly
(38:11):
close to it.
I don't have the figure exactlyoff the top of my head.
There are other nations thathaven't seen as much of a level
of change within that, but Ithink that's because they were
at the opposite end of the scaleto begin with.
So an element of it is is the alittle bit of the modernisation
of Ireland and how we arechanging, and we see that across
(38:33):
a number of different factorsis that we probably never maybe
be at exactly the Europeanaverage, because we do sit out a
kilter for a number ofdifferent figures.
It's the same you mentionedwith the proportion of adults
who are living at home withtheir parents.
That percentage for Irelandsits higher than what it does at
the EU average.
So I think between your 18 andyour 36 year olds it's somewhere
(38:55):
slightly over 30 percent ofyour adults are living at home
and that is sorry over 40%, andthe EU average is under is just
over the 30.
But we've historically sat alittle bit higher as well.
But it doesn't necessarilynegate the fact, I think, that
that is still a negative figureto have, and the impact of
housing supply has certainlyplayed a role in the growth of
(39:16):
that percentage over the pastdecade.
Speaker 1 (39:18):
That wouldn't be the case if housing was available at
you know.
First of all available andsecondly, available at
affordable rates.
Yeah Right, in large numbers.
Speaker 2 (39:26):
Yeah, I think, if you speak to many younger people
who are living at home withtheir parents at the moment.
They would like to get out.
Speaker 1 (39:37):
Well, that's real interesting and actually I
wonder.
I mean, maybe we can look thisup about Japan, because I was
always struck in Japan, how youknow, the idea of a three
bedroom apartment was kind oflike crazy.
Speaker 2 (39:49):
Like nobody.
Speaker 1 (39:49):
Why would anybody need that?
Right, Because everyone issingle, or even if they're
married, there's just the two ofthem.
They might have one kid, andthat's kind of considered.
You know, even they have theirown demographic challenges with
that.
So maybe we'll we'll look intothat and put it in the show
notes, or maybe not.
I might forget, carrie, you'llremind me, hopefully.
(40:11):
Okay, magic wands.
As you know, I give everyone amagic wand, okay.
So if I, I'm going to givemyself a magic wand for the
first time, right?
If I just created 80,000 unitsfor the next five years, right?
So five eights?
Who's good at maths?
What do you think would happen?
(40:31):
Like, we hear a lot about itand we need all this housing, we
have to build this housing,we'd build all these housing.
If we suddenly had an industrythat was like let's say three
times, to make the math simplebigger than it is today, like a
construction industry, wouldthat have enormous impacts on
the economy?
Leave aside, for example, thatsociety would be better off by
(40:52):
having more housing and it wouldbe cheaper, but like the
construction industry, travelingin size, for example, how do
you think that would impact theeconomy?
Speaker 2 (41:02):
That is a good question.
I think let's start maybe withGVA, so our kind of GDP broken
down by sector, and how muchdoes construction activity
account for that?
At the moment and it's actuallybeen pretty stable over the
past 10 years as as GVA hasgrown construction only accounts
(41:23):
for about 3% of that.
Your real estate activitiesthen as a whole, which is
slightly separate, I think, isanother 9%.
So combined they're 12.
Speaker 1 (41:32):
And what would it have been back in the day?
Because you hear like crazyestimates that it was 25% of the
economy.
It was 30% of the economy, thiskind of thing.
Speaker 2 (41:40):
Yeah, it was a lot higher.
They're not so crazy estimates.
You're probably about right.
They're around that level.
But what I think is importanttoday as well, though, is that,
if we look at how our economyhas grown over the past number
of years, and even since COVIDwhere we've had despite there's
(42:02):
been lots of challenges withCOVID Ireland as a nation, or
certainly on GDP terms or GVAterms we've continued to grow,
and the largest components ofthat is industry, of which
manufacturing seems to accountfor the largest part of it, and
that's where some of your moremultinational sectors feed into
that, particularly pharma aswell, and that accounts for, I
(42:23):
think, about 58% of your overalleconomy at the moment.
Your tech sector as well at themoment, as of 2023, accounted
for about 30% of our totaloutput within Ireland Doesn't
account for that proportion ofthe labour market, but it is in
terms of our overall economicoutput, and that's up from about
12%.
Speaker 1 (42:42):
All right, so that's huge right.
Speaker 2 (42:44):
Huge growth within that sector over the last number
of years and that growth hasbeen continuous, even as we have
seen, I suppose, a period ofwhere there has been maybe a
small bit of a pullback from ajobs perspective, or that we've
seen some redundancies announcedacross the tech sector.
In terms of its total output ofthe economy, it has continued
to grow and we know that a lotof that.
(43:05):
So both of those industries ifyou were to combine your 58 and
your 30 percent are largelydriven by that multinational or
international side of oureconomy.
So in one way, I do thinkthere's room for growth.
I guess why you would ask thequestion, and it's more so is
there an element of risk of ifwe go back to the day where
(43:25):
construction accounts for a muchlarger share of our GVA output?
How much are we leadingourselves open to a decline in
activity again?
What would be the impact onbalance sheets.
Speaker 1 (43:40):
Well, that's one thing that I'm getting at.
The other thing I'm getting atis like sort of circular
inflationary effects, likesecond, third order effects that
have.
I wrote a blog post a couple ofweeks ago about how it's
finally dawned on people that weneed, you know, 17 to 20
billion euros a year for housinginvestment.
That's to meet current targets.
(44:01):
But when we talk about thesehigher numbers, like those
numbers go up.
So you're talking aboutbringing in, uh, capital it has
to come from somewhere into theeconomy of 15, 20, 25, 30
billion euros per year.
And the knock-on effects ofhave to hire all those workers
to do all that.
They have to come fromsomewhere, right, so that's
outside ireland.
They have to be accommodatedsomewhere.
(44:21):
So, like we create a furthersqueeze on the accommodation in
order to later deliver moreaccommodation.
You know, have we, have wethought about those things?
Is anybody?
Is that factored into any ofthese forecasts?
Right?
Because obviously, if it getsmassive and then we have another
crash and in the meantimegovernments, as governments do,
(44:41):
will have spent all the taxrevenue that it will have been
generating, and then look aroundand be like what happened?
Where's all the money gone?
Um, but is any of that thoughtabout like that?
We just keep saying we needmore and more and more housing.
We don't really think aboutwell, how are we going to pay
for it?
Right, because the governmentcan't fund all of this.
Speaker 2 (45:00):
Absolutely not, and I do think it's positive that you
would have seen the Departmentof Finance report that came out
again only a month ago.
We've been back to back readingreports for the last few weeks
and they clearly acknowledgethat there was that of that, I
think it was 16.5 billion.
That would only get you toabout 40,000 units.
So we know that figure needs tobe higher, which probably
(45:28):
brings you to about the 20, thatthe bulk of that has to be
private delivery.
It's over 13.6 billion comesfrom the private capital, while
the remaining is public fundsPer annum.
Per annum exactly, and I dothink again it was highlighted
in the Housing Commission reportthey were very clear in stating
that the majority of capital tofund this needed to come from
the private sector, not public.
And again, you might have onlyseen it actually today or was it
(45:49):
yesterday that the Departmentof Finance yet again are kind of
speaking to Jack Chambers, ournew finance minister, in exactly
that commentary of highlightingthe importance of if we're
going to deliver more units, itneeds to come from a huge pool
of private capital.
And I think I suppose anelement of when you look at that
(46:11):
, even, let's say, the 13.6billion of private and we know
it's going to be higher becausethat's only for 40,000 units, so
it does need to be higher thanthat.
Is that even within thatthere's different kind of, I
suppose, risk categories of howlikely is it that it could come
from?
Because we all know at themoment there is certainly an
increase in the level ofactivity that's happening from a
social and an affordableperspective within the market
(46:35):
and any development activitythat is taking place that has
some form of an offtake from anLGA or an approved housing body.
So the land development agencyor the approved housing body
that there's a security of, Isuppose, exit from that.
So it is allowing for, there iscapital there for it and there
is appetite from the banks andfrom your lenders for that
(46:58):
specific part of the sector, sothat part will be funded.
I think where there is morerisk and I'm sure that you would
have potentially even strongerviews on this than what I would
is that element of the marketthat's looking at your private
rental market.
That is the part that has thelargest question mark over it.
If you were to divide upinstead of that 16.2 billion by
(47:20):
public and by private and divideit up by unit type and then say
, well, what capital is feedinginto each of those tenure types
maybe is a better phrase thanunit types?
It's this bucket over here withour private rental market that
there is the biggest concernover, and what is that total
investment volume that isrequired there and what are the
(47:42):
potential policies that arenumber one, off-putting it at
the moment, or two that couldimprove that risk appetite that
is there?
Speaker 1 (47:51):
Yeah Well, we chased most of that capital out with
lit pitchforks a couple of yearsago and from the conversations
that I have, it ain't comingback absent some significant
change.
So we wait with bated breath.
Now that the government havefinished publishing all their
reports, maybe somebody mightread them and actually enact
some policy change.
(48:13):
Well, we appreciate it.
We have at least one sole voiceof reason.
So look, go into your head then.
How many units, how many do weneed?
What do you think?
I'm not going to ask you forlike 10 years, but if you were
just able to do it in Lego, howmany units would you build?
24, 25, 26, next three years?
Speaker 2 (48:35):
Well, I don't have my own forecast, so I'm not going
to pretend I do.
I would also say, too, thatremember to what I said earlier,
in our conversation as well, isthat I think it's really
important that we don't holdourselves to one figure, that
there is a range and there's areason for that range there and,
as I said, it's to aid withthat planning the zoning
(49:00):
policies that are there as well.
But I do think it's back to.
Let's go back to our ESRIreport and the requirements that
were released by them.
So they said that, across the12 different scenarios and on
average per annum for theinitial time period so up to
2030, there was to be 44,000units delivered per annum.
(49:21):
Right On that high scenario,which is high net inward
migration, which I, from a dataperspective, I'm more leaning
towards that, that figure sitshigher.
It's about 52,000 units perannum.
But that's not where I stop andit's how we probably end back
up at that 80,000, is that theESRI made it very clear at the
(49:42):
start of their report that theywere solely estimating for
structural demand.
And well, what is structuraldemand, you might ask me.
Speaker 1 (49:51):
Who was going to ask?
Speaker 2 (49:52):
It is demand solely coming from future population
growth and demographic changes.
Ok, it does not account forhistoric unmet demand, of which
we know there is a significantamount.
So for the units we didn't build, For the units we didn't build
(50:13):
over the past decade or even 15years that we should have been
delivering to the market.
That estimate sits anywherebetween I think it's about 212,
but the top end of it is over250,000 units.
Is the unmet or the backstopthat needs to be filled or that
wasn't delivered over the lastnumber of years.
(50:35):
And really if you had a magicwand and I was able to in the
morning conjure up a lot ofworkers who were free and ready
to go out and deliver theseunits, and the planners and the
financers and everything thatgoes with it, you would want
that those unmet historic demandis delivered in quick
succession over the next numberof years.
That 250 is maybe broken downover the next four to five years
(50:57):
and added on top of that 59 or52,000 annual delivery figure by
the SRI.
So it's back to, as we said,that 80,000 seemed really maybe
scary or high at the start, butif we're combining of trying to
tackle the undersupply of thepast but at the same time ensure
(51:20):
that we're not ignoring ourpopulation growth that is taking
place right now but also everyyear from now, we certainly need
to be quite up over that kindof 70,000 or 80,000 over the
next several years.
Speaker 1 (51:35):
By the sums I just did, in my head there was
102,000.
Speaker 2 (51:39):
Do not quote that to me.
Takeda in the show tonightPredicts 100,000.
Speaker 1 (51:41):
Do not quote that to me, to Kate, and.
Speaker 2 (51:42):
Littles of Deloitte.
Speaker 1 (51:43):
Predicts 100,000 units a year.
Speaker 2 (51:45):
But it's a range.
I just think we need to tacklethat historical figure quickly.
Speaker 1 (51:48):
It's not the point though, like you say about the
range, is that we get caught upand head up in this stuff, but
actually we just need to get outthere and start building.
Speaker 2 (51:55):
Yes and not limit level of building, Because the
market will sort it out right.
Speaker 1 (51:59):
If we have too many, the house prices will decline,
and then there'll be less andthere will be a pullback as well
.
Speaker 2 (52:04):
I think again, if we were in a perfect world, you
would have a five, six yearperiod now where there is a very
high number of units that arebeing delivered, as I said, to
fill that backlog.
That's there and that it wouldtaper off then after that and we
would adjust as the market andthe demand requires it to do so.
But it's back to having therange and just making sure we're
(52:28):
not putting in place a cap or aceiling that limits an output
for a year or for two years,whatever it is, when we know
that there's both a structuraland a historic pent up demand
there that can also change quitequickly too.
Speaker 1 (52:42):
It certainly.
Yeah, makes a lot of sense.
Did I give you your magic wand?
I mean, you kind of took yourmagic wand there and you said
you were going to use it tobuild a backlog.
Are we sticking with that, ordo you have another magic wand?
I'll give you two, just becauseyou've been so good.
Is there anything else thatyou'd like to see changed?
It can be anything, it doesn'thave to be, you know.
Speaker 2 (53:04):
So what else would I like to see changed?
I think there's a number ofitems and one.
Don't worry, I won't go on fortoo long.
Speaker 1 (53:11):
One is more so a highlight too.
Speaker 2 (53:15):
And it's back to our population and our demographics.
And you're going to wonder isthis literally all I talk about
or think about every day?
But it consumes a large part ofmy brain.
I'm going to be honest.
Is that?
And it's almost of you know?
You asked the question earlierof did we see anything happening
in the data that would havesuggested that our population
(53:35):
was growing faster and maybe weshould ramp up our delivery
previously?
And the answer was yes, we sawit there, but it was difficult
maybe to act on it at the timefor various different reasons.
And there is another element ofthat population change that's
happening right now that isn'tgetting the narrative that I
believe it deserves, and that isthat changing that we have with
(53:56):
we have a rapidly expandingpopulation, but we also have an
ageing population, and we haveobviously Ireland at the moment
is one of the youngestpopulations in Europe.
It's one of our you'll see itas a badge of honour almost on a
poster for why invest inIreland?
But also because of that, thenwe're expected to see quite a
change in that older populationover the next number of years
(54:19):
and we are beginning to see anelement of it come through,
particularly from kind of, ifwe're to break it down.
You can break it down in manydifferent ways.
So maybe from 65 years up, orfrom 70 to 85 years up, and even
if we look back solely again,forget your future gazing and
look back at what is the currentdata telling us and we see
(54:39):
whether you break it down byeveryone over 65, everyone over
70 or everyone over 80, thatover the past kind of 10 to 12
years, there's been a growth ofbetween 40% and up close to 50%
within those age categories, andit is expected to increase
further over the next number ofyears as well.
There is no volatility in that.
(54:59):
That will happen.
It is a certain outcome.
But yet, in the same breath orvein, we have where between 2020
and 2023, a significant volumeof nursing home closures that
have taken place and actually areduction in the total level of
our long-term care beds that arethere, and we do see it as well
(55:25):
.
Even in Deloitte, I do a littlebit of work with the turnaround
and restructuring team, andcoming through in those
insolvency stats is continuouslya little bit of concern around
the nursing home sector as well,and it's all down to cost.
How is it, you know, managingthe cost within that area, and
we haven't had changes in, youknow, fair deal schemes and
(55:47):
stuff like that for quite aperiod of time, and it's just a
part of the market that I'mfearful of.
The data is telling us there's,like many other indicators,
there's no volatility with this.
Without doubt, our populationwill age and we need to be
catering the accommodation forthat, be it in a senior living
kind of style, all the way thenup to your more dedicated care
(56:07):
facilities.
And it's not getting anyattention.
If we're losing stock, not evenadding to it, losing it today,
where will we be in five yearstime, six years time, 10 years
time?
And now is the time to addressthat.
And my second magic one andI'll combine the two of these
really quickly is from anincentive perspective.
I know you believe that it'sgoing to be very difficult to
(56:28):
get investors back into themarket, and it's because there's
been no certainty therewhatsoever.
But we need to ensure thatthose incentives are there and I
think rental caps or rentalgrowth policies is one way of
addressing that.
That can't be pushed to theside and again, our lovely
Housing Commission report wasvery clear on that that the
current situation of those isnot working and should be
(56:50):
changed.
The IMF were clear on it lastyear and said it needs to be
changed.
Speaker 1 (56:55):
Yeah, it needs to be changed.
And again, like you say, withthe older people it is a
certainty Rent caps don't work.
It's been proved again andagain, and again.
Speaker 2 (57:04):
It aids the people of today, but not the people of
tomorrow.
Speaker 1 (57:06):
Yeah, and the people of tomorrow, as we all know, are
the future.
Thank you for that.
The point that you made aroundelderly accommodation is it's a
little bit like childcare.
I know there are opposite endsof the life spectrum but again
like childcare, huge problemCrash is very difficult to
operate, very difficult to makemoney, no real incentive for
people to open them, desperateneed for them.
(57:28):
Same on the other end, nursinghomes closing while the
population is getting olderMakes no sense.
Speaker 2 (57:33):
If you put time and energy into trying to help that
part of the market and I wantedto distinguish as well that
there's differences betweenalmost kind of senior living all
the way through to verydedicated kind of full time care
facilities as well is becauseyou know there's data out there
that shows that Ireland is atthe top of the league table in
the European perspective fromthe highest volume of under
(57:57):
occupied units.
So we're essentially using ourstock inefficiently when we
already have limited level ofstock, and a part of that is
down to our structure of ourhousing stock.
Fun fact, we actually have oneof the youngest housing stocks
in Europe.
If you compare it to the States.
It's very different as well,and I think it's because it's
(58:18):
back to how our economy evolved.
We went through a boom, maybemuch later than a lot of other
areas did, yes, but also withinthat.
So it's one of the youngest.
But it's also very different inthat we have a much higher
proportion of houses versusapartments, so we have a much
higher proportion of bedrooms toeach individual than what we do
, than what some of ourneighbours in Europe would have.
(58:39):
And there is an element ofunless I know, it's very, very
difficult for people to trade upand to trade down, but if we're
not providing the rightaccommodation to again
incentivise someone to leavethat four or five bedroom house
that only one or two people aremaybe walking around in every
day, to something within thatarea and of a category or a type
(59:00):
of accommodation they like,it's not going to happen.
But it would free up a housingunit for someone else in a
different stage of their life.
Speaker 1 (59:09):
Absolutely.
Speaker 2 (59:09):
it makes perfect sense If you were in business,
you'd try and use all yourresources efficiently, and we're
not doing that.
Speaker 1 (59:15):
We're not doing it, and there you know, and there's
a lot.
I saw a thing in the newspapera while ago, kind of having a
bit of a pop at people livingyou know, these empty nesters,
they call them.
Speaker 2 (59:27):
They're living in these big houses and they don't
need them, but where are theymeant to go?
Where are they to go?
Speaker 1 (59:28):
Exactly Say okay.
So the option is they selltheir house and then go where,
to a nursing home.
These are perfectly able-bodiedpeople.
They don't need the space.
Fine, but where?
And this is one of theconsequences of apartments being
so difficult and expensive toconstruct?
Pensioners are not for the mostpart.
I mean, there will always becorner cases, but they're not
(59:49):
going to want to go and spend700,000 euros on an apartment in
Balls Bridge.
No Right.
They need to have a niceaccommodation option that takes
account of their financialcircumstance, and our attitude
seems to be well, you own a, ahouse, so sell that and spend it
all on an apartment.
It just seems crazy thatthere's a complete ignorance of
this, and it's it's again anIrish thing.
(01:00:10):
We're storing this problem upfor probably 15-20 years time,
when there's going to be anabsolute crisis.
Speaker 2 (01:00:16):
And it's the same on the other end of the spectrum
too, of where we got rid ofco-living, which was also
another stage of the life cyclethat I think would have fitted a
certain cohort of ourpopulation.
So it's also about I thinkagain back to this idea of being
ambitious and realistic that weneed to be ambitious in our
thinking of well, what isaccommodation, what are the
(01:00:37):
different stages that arerequired, rather than solely
looking at it as a house or anapartment for a family of two or
three kids, because that's notwhat society is no, it's not.
Speaker 1 (01:00:47):
And it's again making policy for what we think should
exist rather than what exists.
I mean, co-living is one of thereasons, the ban on co-living
one of the reasons I started thepodcast to begin with, because
it was so nonsensical.
I mean, we didn't ban co-living, we just banned specific
planning permissions for it,because co-living is going on
all over the city and has been.
Anyone who lived in a houseshared.
That's co-living.
(01:01:07):
You're sharing a kitchen, right, that's it.
And when they want to try andprofessionalise that and put it
into a better scenario anddensify it, no, no, no, no, no.
We must not.
So listen, I don't want to getannoyed.
It's only Wednesday, ok, whatelse we got on here?
Did I ask you to recommend abook?
Speaker 2 (01:01:27):
Yes, you did.
Is it a good one?
What do you got?
So my book recommendation isI'm a little bit.
What I would say is I'm areader when I'm on holidays OK,
that's when I plough through mybooks.
Speaker 1 (01:01:38):
Well, you're too busy reading government reports.
Speaker 2 (01:01:40):
This is it when I'm working on a regular weekly
basis.
I actually don't read all thatmuch for pleasure, even though,
look, I find the likes of theESRI and the central bank
reports to me are veryfascinating as well.
So there is pleasure in them.
Speaker 1 (01:01:54):
But you're not going to recommend the central bank
report.
Speaker 2 (01:01:57):
I haven't sold myself as very cool in this context.
So when I do read for pleasure,then it's crime thrillers or
what I'm into, something with alittle bit of a twist, maybe a
little bit of a murder.
That's where my street is up,and my recommendation is a book
I finished earlier this year andit is by Steve Kavanagh.
It's called the Accomplice.
It is essentially about ahusband who is a serial killer
(01:02:21):
and we're trying to figure outwhere he is.
He disappeared and has left hiswife to deal with the trouble
of it, and the prosecution, Isuppose, are blaming her, and
she is up for jail and is tryingto figure out.
Where is he?
Who did he kill how many people?
And there's like every goodcrime thriller.
(01:02:41):
There's a lot of twists andturns towards the end that
genuinely had my mouth opengoing what?
So I would highly highlyrecommend it.
Speaker 1 (01:02:51):
Just a quick addendum here to say that we got
sidetracked talking about booksand I absentmindedly stopped
recording before I thanked Katefor coming on the show.
So, kate, thank you again.
It was a fascinating chat thatcould have gone on for hours.
You can follow Kate on LinkedIn, where she posts some genuinely
interesting insights into thereal estate market in Ireland.
There's a link in the shownotes.
Thanks for listening.
So my name is Kate English.
I am a director and head ofreal estate research at Deloitte
.
I'm a proud Tipperary womanfrom a farming background but
also have a strange but veryreal fear of cows and cattle.
So, delighted my family got outof farming when I was at a very
young age In real estateresearch and, to be honest, it's
(00:55):
a little bit of a world that Ihave fallen into.
Not something that I would haveexpected.
When I finished in secondaryschool and no idea what I wanted
to do, but knew I had a love ofeconomics, so I decided to do a
undergrad in it French andeconomics.
Still, when I finished thatundergrad, had no idea but knew
I was good at economics, wasdoing relatively well at it, so
(01:16):
I decided to continue on with amaster's degree and it was
during that time that I foundthat I really found my home.
And it was during that timethat I found that I really found
my home.
I kind of excelled at it, wonstudent of the year, got to
present my master's thesis at aregional science conference that
year before finishing it andafter that went to the European
Parliament and I was in theDepartment of Finance there
(01:38):
their finance division and Irealised, even though it's
numbers, there's a bigdifference between finance and
economics and it wasn't reallythe home for me.
Came back, got an opportunityfor a role with as a junior
economist and researcher withSherry Fitzgerald, and that is
where my property or real estatejourney began and at the time I
(01:59):
was like I'll do this for ayear, two years max, and of
course, that didn't turn out tobe the case.
I got very sucked in and Ithink, from a research
perspective, what keeps meintrigued and why I am still
here is that there's alwayssomething changing within the
market.
We have a wide range of sectors, from your residential to all
the subsectors within commercialas well, and, I suppose, within
(02:22):
research and economics.
My role is to discover what arethose changes within the data
every six months and not onlywhat are they, but why are they
happening and try and tell thatstory and narrative to people
who don't want to be in theweeds of the data, don't need to
be, but yet need to understandthe narrative and how the market
(02:43):
is evolving, and it's my job todo that.
Speaker 1 (02:45):
That's quite the journey that you went on to
transition across all thosedifferent I was going to say
fields, but then bring you backto the cows.
And we don't want to scare youout of the room, but I mean,
deloitte wouldn't typically beknown as being directly involved
in the real estate.
You know it's not an agent.
(03:05):
Typically, research in realestate comes from real estate
agencies and that's not reallywhat Deloitte does.
So give us a bit of backgroundas to who your main.
You don't have to name yourclients.
But who do you produce theresearch for, or is it rather
just produced in the round tocontribute to data and to policy
insights?
Speaker 2 (03:25):
Yeah.
So I would agree with you whenyou first hear of Deloitte, you
don't think of real estate, youdon't think of property.
I certainly didn't a few yearsago, but actually in reality
they have quite a long historyand track record of delivering
for some of the largestdevelopers and market players
within the market and I supposeit originally would have started
(03:47):
very much so.
In their tax team they havequite a large real estate tax
division that works from both anacquisition side, a development
side, succession planning, andhave quite a large team within
that as well.
It also then developed out alittle bit into the finance team
, and so this would have beenheaded up by a partner, john
Dottie, and really was born outof when we were in the depths of
(04:12):
the recession and there was alot of restructuring work taking
place and essentially trying toaid developers get through that
difficult time.
And as the market evolved, Isuppose that work kind of
changed.
It moved and evolved from theinsolvency side or the
restructuring of balance sheetsinto more doing debt and capital
(04:34):
raises for some of the largerinvestment funds and also
developers within the market,and subsequently then from that
we've evolved into a real estateadvisory team that includes
your chartered surveyors, townplanners, quantity surveyors,
financial modelers so there's asuite of expertise across all
(04:54):
aspects of the life cycle of anasset which, as you said, is
from the outside, you mightn'ttypically think of.
For Deloitte and I thinkResearcher my role within
Deloitte was kind of the finalpiece of that puzzle they're
saying, right well, if we'reacting in every part of the
market and continuing to buildour client base which, as I said
, stems from your developersyou're both large and small
(05:17):
scale domestic developers, butalso international institutions
and investment funds that arelooking at Ireland we need to
ensure that we are solid andconfident of the data that's
feeding into that strategicadvice that we're given.
And that is my role, ourclients or the work that we do.
From a research perspective, itdiffers maybe a little bit from
(05:38):
what you would see from some ofthe commercial agents in that
we don't produce quarterlyreports.
I think there's a lot of themthere and the commercial agents
do a really good job at that.
So it doesn't necessarily helpthe market or the industry by
adding another one to that mix.
What we do is more largerpieces of research a couple of
(05:59):
times a year, be it an outlookreport, a crane survey report
and event that we do, but alsothen, at the same time, more
bespoke pieces of research thata specific client has come to us
with an exam question and wanta more detailed look into, and
that's the type of researchreports that we then produce.
And obviously, like anyresearch team, there is an awful
(06:20):
lot of external engagement aswell, so the research role is
also to be involved in mediaconferences, podcasts or
wherever there are externalforums where the property market
is being spoken about and thatDeloitte has a voice within that
conversation.
Speaker 1 (06:39):
Well, we're grateful that that's the case, so that
you can come on here and you cantalk to us about it.
I did tell you that we weregoing to talk about housing, but
, as you know, the secret, realreason for this podcast is
Taylor Swift, and so I wanted tofollow up on a post I saw that
you made and about Taylor Swift.
(07:00):
You're an economist.
Tell us the truth, taylor Swift.
You're an economist.
Tell us the truth.
Did she really have any impacton the economy, or is it just
kind of propaganda to try andget her to come back?
Speaker 2 (07:10):
You know what it's funny?
We think LinkedIn is seriousand it's there for doing our
posts on the property market,the economy, but that Taylor
Swift post was probably the mostengaged post I've ever had on
LinkedIn.
Speaker 1 (07:22):
We're all secret Swifties.
There's two types of people.
There's people who are fans andpeople who lie about it.
I'm probably in the latter.
Speaker 2 (07:30):
Yeah, the truth is we don't fully know and I'm not
going to give you a figure.
I think we would have seen,actually, quite a lot of
criticism from some of theanalysis that came out from
other countries or jurisdictionstrying to analyse how much she
brought to the economy.
But we do know from certaindata sets out there for example,
looking at the SCOR data,looking at occupancy rates or
(07:50):
average daily room ratesachieved across the hospitality
industry that weekend that itdid perform particularly well.
Occupancy was up over 98%.
And there was also some cardspending data out from the likes
of Bank of Ireland that showedthe volume of consumer spending
that had increased acrossdifferent age brackets, up
anywhere from between 20 and 40percent.
(08:11):
But also, very interestingly,there was a real spike in Dublin
One and it was put down to that.
That is where her officialmerchandise site was was.
So it was people travelling toget the jumpers, the t-shirts,
the hoodies, everything thathave that Ears Tour logo on it.
We're also spending within thatlocality as well.
So she does bring a boost.
(08:32):
But my real point with thatpost was that it's the strong
calendar of events that adds toour economy and let's not get
too bogged down on how much justone event makes you know Right,
because that weekend TaylorSwift played three nights right
in Dublin.
Speaker 1 (08:47):
You had Shania Twain was in Malahide Castle.
Speaker 2 (08:51):
She was we had Green Day on the Thursday.
Speaker 1 (08:54):
Green Day were in Marley Park, there was two
semifinals on for the GAA inCrow Park and there was Pride
was on and Villagers wereplaying in Trinity as well the
same night.
Speaker 2 (09:09):
Yeah, an estimated over 600,000 additional people
to the city for it, which isphenomenal.
Speaker 1 (09:14):
But like you say, people often wonder about
cultural spending and culturalsupport and it seems like a
woolly topic, but it's thosekind of things that actually
drive the economy right.
Speaker 2 (09:24):
They do.
They get people out andspending across all different
aspects.
There was again in some of thatspending data, even a reference
to the increase in spendingwithin beauty on the lead up to
it People getting ready, I think, for the concert and for
everything else that they weregoing to.
But it's essential for oureconomy.
Essential for our economy.
(09:45):
Now, the debate that often liesthere sometimes when you're
trying to estimate the overalleconomic value of these events,
is that a portion of thatspending would already have
happened that weekend, just inanother channel.
But I still think, as aconsumer and you and I are
consumers we need to also beincentivised to go out and spend
and be active over the weekendsand during the weekdays.
So events like these are veryimportant.
Speaker 1 (10:06):
Fun is important, right, it's the main takeaway.
Speaker 2 (10:09):
Life is for living.
Speaker 1 (10:10):
Well, we managed to get through that without once
introducing a pun on any of thelyrics or song titles.
So congratulations there.
We'll probably have to go backto boring things like housing.
So one of the things I wantedto ask you about, because you're
a numbers woman, is numbersright.
We see a lot recently of peopleI call it an arms race to outdo
(10:34):
each other on predictions forhow many houses are needed.
And what strikes me in being inthe industry that I'm in, and
from having done the podcast andeverything, is how little
agreement there is, Despite itbeing such such an important
part.
We can't seem to agree on howmany units are needed.
I'm not a economist, I'm not astatistician, but I would have
(10:57):
thought it's not that difficultfor people to look at
demographic detail and come upwith like a ballpark, like not
exact numbers.
But I've heard in the lastcouple of months people say
30,000, 40,000, 60,000, 80,000,I think a stock broken firm put
out a report saying it was morethan 80,000 per year and it just
(11:20):
seems to me like how couldthere be, you know, such
differing views and how couldyou get to such different
numbers?
And you're going to tell me nowwhy?
Speaker 2 (11:31):
And arms race is definitely one way of viewing it
or framing it.
But I think really what we haveseen over the past year and
really the last six months, andwhy you are seeing those
increasing numbers, and almostit felt like for a stage there
that every week there was a newnumber that was trying to pip
the other and really the reasonfor that was because we've known
(11:53):
for quite a period of time thatour population is expanding at
a much faster pace than had beenpreviously forecasted or
anticipated.
For we had census data.
Our census was due to takeplace in 2020.
It didn't because of COVID, andwe finally got it in 2022.
And after that census, there wasa lag period between the census
(12:16):
data being collected, collated,analysed and our new set of
population forecasts had beengenerated.
And I think during that voidperiod of where we were waiting
for our population forecasts tobe officially updated, it
allowed for a period of version1, 1.2, 1.3 and 1.4 of what
(12:37):
people thought the housingrequirements were going to be.
And it is all based on the factthat we know that our
population was expanding fasterthan what was anticipated, but
no one was fully sure as to whatthose new population forecasts
would be, so it allowed for thiskind of bubbling of the figures
.
But now that we've come pastthat period and we've gotten our
updated population forecastsand we've gotten reports like
(13:00):
the Housing Commission, thosehigher numbers all of a sudden
don't seem all that crazy.
Speaker 1 (13:06):
Yeah, which is the interesting thing to me and
maybe for the lay peopleincluding me, you might explain
the basis of how these estimatesare arrived at.
So if you're looking at CSOdata like population, I guess,
demographics how do you go andbuild an estimate as to how many
(13:27):
houses would be needed to housea given?
Speaker 2 (13:29):
population.
So there's three main variableswithin this, and this is
whether, again, if you look at,for example, an Irish estimation
of this, or else you look at itfrom a European perspective as
well, it's just three samevariables that are used, but
there's slightly differentassumptions behind them,
obviously, depending on thecountry and what those variables
are.
So the first one is ourpopulation growth, which is
(13:52):
arguably maybe one of the mostimportant ones and the one that
has seen the largest amount ofchange since our last estimates
were delivered to the market.
Our second one, then, is theaverage household size, and this
one is also critical and whereIreland, I suppose, of recent
times, has kind of deviated alittle bit in terms of trend.
(14:12):
And that last one is the rateof obsolescence within our
housing stock.
So if we were to break down thethree of those they are your
three indicators If we were tostart with, maybe, population
growth first, because, as I said, it's the largest component and
maybe one of the most importantwhen you think of how a
population grows or decreases,there are again a number of
(14:36):
different indicators within thatOne is your life expectancy
rate, and that influences howmany people we have passing each
year and therefore, leaving ourpopulation figure, we have our
fertility rate, so how manybirths are taking place?
And then the last element is netinward migration.
I think the key takeaways maybefor you and listeners to take
from this is that in those ESRIforecasts that were released
(14:59):
only at the beginning of thissummer, so from a fertility rate
perspective, they're assumingthat there's no real change.
We have seen a decrease in thefertility rate within Ireland
over the past number of years,but we're still seeing a little
bit higher than the EU averageand they're assuming that that
stays the same.
Speaker 1 (15:15):
And that fertility rate.
Is that enough to sustain thepopulation and to grow it, even
if it's a little bit, or is oris it?
You know?
You hear in a lot of Europeancountries that if it wasn't for
inward migration, the populationwould be declining.
Is that true here?
Speaker 2 (15:30):
that's not necessarily true here within
Ireland, because I think we havethat slightly higher fertility
rate.
But at the same time, if wedidn't have net inward migration
at all, I think it would bevery bad for our economy and our
economic growth and wouldcertainly impact those
population figures.
You know our fertility rate.
I think it sits at about 1.63at the moment, which, as I said,
is above that EU average.
(15:52):
But that remaining constantpart, I suppose in one way it
does leave a little bit of aroom for a change in the
forecast in the future.
For if that was to fall wewould have less births, so that
would bring down your youthpopulation.
Speaker 1 (16:05):
But there would be a significant delay to the effect
on the housing market.
For that right.
Speaker 2 (16:12):
Absolutely, whereas the inward migration is sort of
an immediate effect.
It's an immediate effectbecause, when we look at the age
categories of our inwardmigration, it typically is
between that 18 and 44 year oldcategory, which are those
perfect, almost householdformation years.
The life expectancy is expectedto increase.
(16:33):
I don't think that wouldsurprise you.
We are living longer, sothere's no real debate over that
.
It will increase a little bitfurther.
There's a little bit of adifference between male and
female, which has always beenthe case historically.
And then that last component ofthat population growth is, as we
said, that net inward migration, and this is where I think
there was the largest level ofchange from what would have been
(16:56):
previously the estimates, and Ithink what is really key here
to note is that as our economybegan to recover post the
financial crash, there was anexpectation that we and we had
an awful lot of people leave thecountry of Ireland to go work
somewhere else because theycould not get jobs here, and at
the time it was expected thatthat figure would return
(17:18):
positive, meaning more peoplewere entering Ireland rather
than leaving it in about 2016.
And it actually happened a yearearlier at about 5,900 persons
that year still not all thatmuch, but it really ramped up in
2016, 2017 and 2018.
Got up to over 38,000 in 2017and over 44,000 net inward
(17:41):
migration people both in 2017and 2018 and remained constant
at that figure, which was quitesignificant.
And I think that was the changethat people weren't anticipated
.
And there's a little part of methat I look back and I go well
and actually still and I'veheard it at some industry events
this year of is there a littlebit of a narrative or a feeling
(18:03):
within Ireland of where we arealmost afraid to accept that we
are a successful economy in manyways.
We are continuing to grow andthis growth can continue if we
put the policies in place toenable that growth, while there
was a bit of an expectation ofwe'd bounce back, but it
wouldn't stay at these higherlevels, which isn't what has
(18:23):
come through.
Speaker 1 (18:24):
of we'd bounce back, but it wouldn't stay at these
higher levels, which isn't whathas come through.
Yeah, well, it's certainly aparticularly Irish thing to be
only looking for the rain cloudon the horizon, but I suppose we
do also because of being asmall country without really any
indigenous.
You know, high employmentindustry here, right, everything
is, as an island, comes fromabroad.
(18:44):
Even tourism is really moneyfrom abroad.
The technology thing is fromabroad, the pharmaceuticals are
from abroad and there's just thefarming and we won't bring that
up.
So we do kind of have to bekeeping an eye on that.
But it's still interesting tohear how these things are
arrived at.
But I'm just struck by thefigures that you're giving there
(19:05):
.
So 2018, you know, I'm justdoing the sum in my head is
maybe 500 housing units a weekare required that year to keep
pace for the housing stock withthe rise in population, in
population, and we weren't doingthat in 2017, right, and we're
probably doing it now.
But do we know now, like, uh,post pandemic, has the migration
(19:28):
thing turned?
I know we hear a lot in thenews about, about, um, the
international protectionapplicants and that, but that's
actually relatively very smallnumber.
But the, the sort of eumigration, which is what was
primarily driving people in here.
Right, it is for for technologyjobs.
Has that resumed?
Post pandemicpandemic Are weback up at very big numbers
again?
Speaker 2 (19:47):
Yes, it has resumed post-pandemic.
So there was a dip in 2020, butafter 2020, our net inward
migration figures returned quiterapidly once again, and there
is the expectation within theESRI report and also in
subsequent CSO populationestimates that have come out
since then too, which areseparate that have assumed that
(20:08):
our net inward migration wouldremain at an elevated level over
the next few years beforedropping back.
So I think the CSO actuallyhave it that for the next few
years we could be up around75,000 net inward, which is a
lot higher than where we startedat 5,900 in 2016, and even
where we were with over 44,000back in 2017 and 2018.
Speaker 1 (20:29):
Wow, that's that's.
I mean, those are big numbers.
That's kind of amazing and Iwonder.
I mean it's not easy to comehere, right, like, housing costs
are very high We'll get ontothat in a minute but you're
talking about that number ofpeople moving to a small wet
rock in the Atlantic.
I wonder what things would belike if housing was cheap.
(20:49):
You know, would there be100,000 people coming here?
I mean, if we're actually ableto solve infrastructural
problems, are we holding backour economy by not fixing these
things right with housing?
Speaker 2 (21:01):
Yeah, I think and it's been well, I suppose, cited
or plugged on by the likes ofthe IDA or the international
business community here from allthe FDI investment here that
certainly housing is commentedon as a real barrier and a
barrier that's beginning to havea larger impact on investment
(21:23):
decisions.
Now it hasn't led to the casethat we do not have any FDI
investment or increasinginvestment from those large
firms within Ireland.
That simply isn't true, but itcertainly is a component as to
why they may weigh up anotherlocation a lot more now than
what they would have a few yearsago, and I think it is a reason
why we do need to get thisright and try and improve the
(21:45):
situation.
Because we are a small nation,as you have rightly said, a
small open economy, and FDI hasbeen such a critical part of our
growth for the past number ofyears and it's important that we
keep that going.
It's important that we alsoinvest in our SMEs and ensure
that we deliver almost the sameway as we have an FDI, a DDI, a
(22:07):
domestic direct investmentindustry, and ensure that we
continue to grow that.
But we want to be encouragingforeign direct investment here
as well and that the growth ofthose sectors within Ireland.
Speaker 1 (22:18):
Yeah, and, like you say, it hasn't had any impact
yet, but it's.
You know it's a bull market,right, people are expanding
everywhere and it's a little bitlike, you know, running a hotel
during Taylor Swift, right,every hotel room is going to get
sold.
But when it's a wet Wednesday,November, you know it's, it's
only then the guy who'scompeting, who's got the best
(22:39):
product, that's going to havethe room sold.
Speaker 2 (22:41):
Yeah.
Speaker 1 (22:41):
And the sort of terrible hotel with that's cold
and noisy, that room's going tohave the room sold, yeah, and
the sort of terrible hotelthat's cold and noisy, that
room's going to be empty.
And we seem to I think we seemto carry on a little bit with
FDI like that.
That's never going away, thatthey just love us because we're
Irish, which is kind of nonsenseright there here because of the
policy conditions that exist.
Speaker 2 (22:57):
It's not a guarantee.
You need to compete for that,and every nation is competing
for FDI investment, and it'sbeen incredibly valuable to
Ireland.
It's been the backbone of oureconomic growth story, so that's
why we need to ensure that weprotect it, and I suppose the
other part of it is is to ensurethat not only are we attracting
individuals from other nationsto come to Ireland, but that
(23:18):
we're also incentivising a lotof very bright and well-educated
Irish individuals and youngpeople to stay as well.
Speaker 1 (23:27):
Which is a huge thing .
That's oftentimes like a casualand I say that truth is the
first casualty of war but thatwe look at stuff like this and
say, well, the numbers are stillgoing up, so the number of
people coming here are stillgoing up, employment is still
going up, but there's, I wonder,are there any hidden data
points showing that we arelosing people?
(23:48):
I mean, we have high net inwardmigration, but that doesn't
count, it's net, right?
If you're looking at the growthfigures, there are still people
who are emigrating and Irishpeople are still emigrating, and
not insignificant numbers.
Speaker 2 (24:01):
I do think, though I'm a firm believer of that If,
in the morning, we solve thehousing crisis, some young
people would still leave becausethey want to experience the
world out elsewhere as well, andso they should be able to.
Critical part is that they'reincentivized to come back and go
get their experience in London,australia, somewhere in Europe,
wherever it is Canada, theStates but that they come back
(24:23):
and see a way of coming back.
Speaker 1 (24:24):
Bring back the secrets.
Yeah, yeah, we'll, we'll, we'll, we'll get back to that.
One other just point when Iasked you earlier and I forgot,
cause this is something thatgets brought up a lot
dereliction, or you used a nicerword Obsolescence.
Obsolescence Is that.
Is that much of a factor,because I mean, we all see
derelict houses, but is thereenough of that being created
(24:47):
year on year to have any impact,like houses coming out of use,
you would think?
In the current climate, thatwould be brilliant.
Speaker 2 (24:58):
Yeah, so obsolescence is a difficult one for the SRI
and anyone else to get a handleon the rate and the level of it
each year.
Research into it is slightlylimited, and so there's
assumptions around it that it'sa rate of 0.25% of your total
stock each year.
But I suppose the reason whythey are insisting on putting it
in there and I agree with ittoo is that the key for me with
(25:22):
this point is that even if wehad, in a very strange world
where not our population didn'tincrease or decrease by one
person and our age structurestayed exactly the same, even
within that year, we would stillrequire a level of development
activity and delivery of newstock to replace that obsolete
(25:42):
stock.
It's almost the way I describedit to someone else the other
day was you have your pair ofwinter boots, you wear them
throughout the entire winter,you get every penny's worth out
of them, but by the end of theperiod of wearing them there's a
hole in the sole.
The cobbler says I can't repairit, and the following winter
you replace those boots, and youcould almost view that housing
as the same perspective.
We will always have an elementof obsolete stock that will need
(26:05):
to be replaced.
So even if we had no populationgrowth, we had no change in our
age structure, there needs tobe a level of development
activity and I think that'sprobably, I suppose, one of the
items that allowed us to getinto a position where we have
such a high level of unmet orhistoric pent up demand is
(26:26):
because we did go through almosta decade of where there was no
delivery whatsoever, and thatwas always going to hurt at some
stage.
It was just difficult, Isuppose, when you're in the
depths of that very dark periods, to see that if we're not
delivering now, this will hurtus in a few years time.
Speaker 1 (26:43):
And that was another thing I had on my list to ask
you, because that rate ofobsolescence is obviously a
prediction, right?
You're saying certain number ofhouses are going to go, you
know, go out of use every year.
So we have, we make estimates,we make predictions all the time
.
Could we have seen this coming?
Or rather, did we see thiscoming and we said, well, we've
got no money, so we're justgoing to have to let it happen?
Or, you know, was this a shock?
(27:06):
Is there any redemption reallyfor us as a society to not have
done something about thisearlier than we started?
I mean, I would argue thatwe're still not really doing
anything about it, but we canget onto that later.
But you know, did you see itcoming?
Did anyone see it coming?
I know there's going to be alot of Cassanders out there who
(27:27):
said I was this lone voice ofreason, but the data was it very
clear?
This is happening.
You guys need to be building,and we didn't do it.
Speaker 2 (27:35):
Yeah, I think in one way, hindsight is golden, but at
the same time, when you lookback, firstly, I would say, if
you have a decade of absolutelyno delivery back to my
opselessons point, it was alwaysgoing to hurt at some stage and
we saw the impact of that.
The second part is and it'sback to our lovely population
forecast is that in between eachcensus period, there is annual
(27:58):
population estimates that areproduced by the CSO period.
There is annual populationestimates that are produced by
the CSO.
So even when we were waitingfor a revised population
forecast to be released now in2024, we were getting an
indication or a level as towhere our population was growing
and whether it was outpacinggrowth that was expected there
(28:18):
before.
And I think in one way it'suseful to look back at.
If we look at the previousforecasts that were there, so
your population was expected togrow by about 916,000 persons
from the period 2016 to 2040.
(28:39):
And the annual growth rate ofthe population during that time
was expected to be 0.7%, whichwas quite a pullback from where
it was during the period 1966 to2016.
But if we look at thepopulation estimates from 2016
up to 2019, so prior to, or evenup to 2022,.
(29:00):
Just before we got to ourcensus data, those annual
increases were averaging around1.4%, which is much higher than
your 0.7%.
Speaker 1 (29:09):
It's a double.
Speaker 2 (29:10):
Double and we had an additional well over 200,000
people added during just even afour-year period alone.
So there was an indication thatour population was surpassing
what we expected it to be.
And if your population isgrowing at a faster pace than
what you expect and we know thatduring those time periods that
development activity or yourlevel of completions in the
(29:32):
market was still actuallyrelatively low we had gotten
back to doing some form ofdelivery, but still very, very
low levels of delivery it wasgoing to impact at some stage.
And the best way I think ofalmost showing that that
acknowledgement has taken placeis, as I said, over 916,000
people were due to.
(29:52):
The population was due toincrease from 2016 to 2040 by
the year.
So right In their most recentset of forecasts and we now look
at from 2022 to 2040, so,cutting out those six years,
that population is forecasted toincrease by over 922,000 people
, but in a smaller timeframe.
Higher level of net inwardmigration which, from the
(30:12):
feeling of the data at themoment, you could suggest that
base or that high scenario isactually quite likely as well.
We see an increase of well overa million and we're getting to
a population of over six millionby the 2040.
(30:35):
So even within that, we'reseeing that now we're expecting
the level of population growthto happen in a much smaller
period of time, but to even belarger than what it was in a
larger period of time only fouryears ago or six years ago.
Speaker 1 (30:48):
Those numbers are kind of astounding to me.
Speaker 2 (30:51):
Someone did actually push me the other day as well to
go do you think Ireland willget to double digit population
growth?
Let's think here and go, howambitious or realistic do we
need to be?
And there's a little part of mesomewhere that went oh, double
digit population growth, willIreland ever be a 10, 11, 12
million population?
And I was typically I was alittle bit reserved in holding
(31:13):
back from it, but then it's backto the element of well, in one
way, when we're approaching this, I think it's important, going
forward, that we're ambitiousand realistic in terms of what
we can deliver at certain pointsthroughout each year, but that
we're also ambitious andrealistic as to the extent of
growth that Ireland couldpotentially have.
(31:35):
And let's not almost hamstringourselves or hold back that
growth from taking place becausewe don't believe Ireland can
get to that level.
And I think it's also why andthe Housing Commission did a
really good job, I think, ofhighlighting this in their
report that was released in JuneWe've a lot of reports that
have been delivered only in thelast three months.
Speaker 1 (31:54):
Subject of a future episode.
Speaker 2 (31:56):
Yeah to the housing market, but that they made a
very good point of let's ensureactually, that we're not getting
bogged down on just one housingrequirement data each year
figure.
So whether it's that 80,000 orit's the average of 44,000 that
the SRI have now on theirbaseline up to 50, I think 2,000
(32:17):
on an annual basis for theirhigher growth scenario, and
instead that it should be arange so that we're not
constricting ourselves.
Because that's really whathappened on the previous version
when we looked at how the NPF,the National Planning Framework,
was applied down to your localarea plans.
It was quite rigid of each areawas grown to grow by a certain
(32:41):
number and there was no wiggleroom either side of that, which
really limits the growth thatcan potentially happen in each
area.
So it's almost let's not getbogged down in one figure and
ensure we're being that range isboth ambitious and realistic.
Speaker 1 (32:55):
That's a really good point.
There actually was an exampleof this I'm not going to name
the council, where it's notreally the council's fault.
There was a small town andthere was a zoned this land.
It would have been 700 personsand so the I don't know if the
planning regulator actuallystruck it down or whether it was
(33:27):
said you know, you can't zonethe land because it's going to
put you over the limit.
So the difference between 500and 700, so it meant that 100
and something houses didn't getbuilt for the fear that there'd
be 100 more people within anarea, I mean and it's funny that
I the debate that has oftentaken place, um, politically and
(33:48):
otherwise, about, about zoningland and about delivery and
everyone afraid about units.
Um, and I'm cast back to theghost estates.
Remember those when we had allthese houses that we're never
going to fill them?
That was only a few years ago.
Right, these were headlines inthe newspaper to the ghost
estates.
Remember those when we had allthese houses that we're never
going to fill them?
That was only a few years ago.
Right, these were headlines inthe newspaper about the ghost
estates.
And we're the ghost estates now, right?
I mean the simplest way to lowerhousing costs.
(34:08):
Who am I telling an economist?
Supply, demand right, makeloads of them, then they'll get
cheap, and then, when they'recheap, it's good.
Speaker 2 (34:17):
Exactly, and there's also an element of I'm probably
digressing or going back alittle bit to what we were
speaking about earlier but whenwe were looking at those, what
are the three components?
I said your population growth,your obsolescence rate, both of
those which we've spoken about,but also that average household
size, and this is something thatdoes also have an impact on our
(34:38):
requirements for housing, butalso not today, but in the
future.
And why?
Maybe it's not a bad thing thatan additional 100 people or
whatever it is, units aredelivered within a certain area,
because our average householdsize has actually stagnated a
little bit over the last decadeand I think a reason for that,
some of it is due to supply,that there isn't the ability to
(34:59):
form new households because thestock isn't there.
Speaker 1 (35:02):
So this is adults living with their, or kids
living with their parents.
Speaker 2 (35:05):
Yes, so we're sitting at 2.7 persons is our average
household size at the moment.
But again, if we were to assumethat, you know, all remained
equal and we'd no increase inour population growth but the
average household size decreased, it automatically generates a
new portion of households thatwould be formed and therefore
require housing.
(35:26):
And I think it's particularlysay, if we look at if we had an
average household size of fourpersons we don't, we did back in
the 60s and 70s, but we don'tanymore An additional 1.1
million people living in thestate and that's that higher
rate by the ESRI of if we get toover the 6 million population,
that would create an additional281,000 households.
(35:49):
But if that figure is 2.8, thatadditional household rises to
over 400,000.
And if we expect to fall inline with where EU average is,
eu average more so sits betweenI think it's about 2.3 or 2.4 as
the average household size.
If we were to continue to movetowards that trend and you get
(36:09):
where I'm going with this andthat 2.8 was to drop further,
that 400,000 rises even more.
So it's another element of wehave changing households, we
have changing families, we'vechanging dynamics across our
society and I do think thathousehold size figure will
decrease further, or certainlywill, if the supply is there.
(36:30):
So an element of that willsatisfy some of that excess
demand that someone may befearful of as well.
Speaker 1 (36:37):
Yeah, well, certainly no danger of excess supply at
the moment.
I don't think I was going toask you about those demographics
, but you have really answeredthe question ahead of time.
But I do hear that a lot aboutthe trend like reversion back to
the EU and I'm always like theEU now 27 countries and
culturally we're all very, verydifferent and maybe you don't
(36:58):
have this information, but I'dbe kind of curious to know what
the situation in the UK is like,because we culturally as much
as I get shocked for saying this, you know sort of similar-ish
attitudes to things as people inin in the UK Are they having?
And if you don't have theanswer to this, it's fine but
are they having the same kind ofdemographic shift?
(37:21):
Like, is everywhere thehousehold numbers, household
sizes declining?
Is this just like anunavoidable trend?
Speaker 2 (37:29):
In one way, yes, it is an unavoidable trend.
In another way, it's happeninghere in Ireland quicker because
we really sat at the top of theEuropean table.
Say, if we were to throw theaverage out the door and look at
it on a country by countrybasis, ireland sat at the top of
that table for quite a longtime.
We had larger families to beginwith.
(37:49):
That really impacted that andwe were a very different society
back in the 50s, 60s and 70sthan what we are today, and we
were poor as well.
We were poor, so that averagehouse size, as I said, sat above
six back then and we've comedown quite gradually until the
last two census periods.
I think the UK does sit alittle bit lower than where we
do as well.
They're not quite at the EUaverage, but they're certainly
(38:11):
close to it.
I don't have the figure exactlyoff the top of my head.
There are other nations thathaven't seen as much of a level
of change within that, but Ithink that's because they were
at the opposite end of the scaleto begin with.
So an element of it is is the alittle bit of the modernisation
of Ireland and how we arechanging, and we see that across
(38:33):
a number of different factorsis that we probably never maybe
be at exactly the Europeanaverage, because we do sit out a
kilter for a number ofdifferent figures.
It's the same you mentionedwith the proportion of adults
who are living at home withtheir parents.
That percentage for Irelandsits higher than what it does at
the EU average.
So I think between your 18 andyour 36 year olds it's somewhere
(38:55):
slightly over 30 percent ofyour adults are living at home
and that is sorry over 40%, andthe EU average is under is just
over the 30.
But we've historically sat alittle bit higher as well.
But it doesn't necessarilynegate the fact, I think, that
that is still a negative figureto have, and the impact of
housing supply has certainlyplayed a role in the growth of
(39:16):
that percentage over the pastdecade.
Speaker 1 (39:18):
That wouldn't be the case if housing was available at
you know.
First of all available andsecondly, available at
affordable rates.
Yeah Right, in large numbers.
Speaker 2 (39:26):
Yeah, I think, if you speak to many younger people
who are living at home withtheir parents at the moment.
They would like to get out.
Speaker 1 (39:37):
Well, that's real interesting and actually I
wonder.
I mean, maybe we can look thisup about Japan, because I was
always struck in Japan, how youknow, the idea of a three
bedroom apartment was kind oflike crazy.
Speaker 2 (39:49):
Like nobody.
Speaker 1 (39:49):
Why would anybody need that?
Right, Because everyone issingle, or even if they're
married, there's just the two ofthem.
They might have one kid, andthat's kind of considered.
You know, even they have theirown demographic challenges with
that.
So maybe we'll we'll look intothat and put it in the show
notes, or maybe not.
I might forget, carrie, you'llremind me, hopefully.
(40:11):
Okay, magic wands.
As you know, I give everyone amagic wand, okay.
So if I, I'm going to givemyself a magic wand for the
first time, right?
If I just created 80,000 unitsfor the next five years, right?
So five eights?
Who's good at maths?
What do you think would happen?
(40:31):
Like, we hear a lot about itand we need all this housing, we
have to build this housing,we'd build all these housing.
If we suddenly had an industrythat was like let's say three
times, to make the math simplebigger than it is today, like a
construction industry, wouldthat have enormous impacts on
the economy?
Leave aside, for example, thatsociety would be better off by
(40:52):
having more housing and it wouldbe cheaper, but like the
construction industry, travelingin size, for example, how do
you think that would impact theeconomy?
Speaker 2 (41:02):
That is a good question.
I think let's start maybe withGVA, so our kind of GDP broken
down by sector, and how muchdoes construction activity
account for that?
At the moment and it's actuallybeen pretty stable over the
past 10 years as as GVA hasgrown construction only accounts
(41:23):
for about 3% of that.
Your real estate activitiesthen as a whole, which is
slightly separate, I think, isanother 9%.
So combined they're 12.
Speaker 1 (41:32):
And what would it have been back in the day?
Because you hear like crazyestimates that it was 25% of the
economy.
It was 30% of the economy, thiskind of thing.
Speaker 2 (41:40):
Yeah, it was a lot higher.
They're not so crazy estimates.
You're probably about right.
They're around that level.
But what I think is importanttoday as well, though, is that,
if we look at how our economyhas grown over the past number
of years, and even since COVIDwhere we've had despite there's
(42:02):
been lots of challenges withCOVID Ireland as a nation, or
certainly on GDP terms or GVAterms we've continued to grow,
and the largest components ofthat is industry, of which
manufacturing seems to accountfor the largest part of it, and
that's where some of your moremultinational sectors feed into
that, particularly pharma aswell, and that accounts for, I
(42:23):
think, about 58% of your overalleconomy at the moment.
Your tech sector as well at themoment, as of 2023, accounted
for about 30% of our totaloutput within Ireland Doesn't
account for that proportion ofthe labour market, but it is in
terms of our overall economicoutput, and that's up from about
12%.
Speaker 1 (42:42):
All right, so that's huge right.
Speaker 2 (42:44):
Huge growth within that sector over the last number
of years and that growth hasbeen continuous, even as we have
seen, I suppose, a period ofwhere there has been maybe a
small bit of a pullback from ajobs perspective, or that we've
seen some redundancies announcedacross the tech sector.
In terms of its total output ofthe economy, it has continued
to grow and we know that a lotof that.
(43:05):
So both of those industries ifyou were to combine your 58 and
your 30 percent are largelydriven by that multinational or
international side of oureconomy.
So in one way, I do thinkthere's room for growth.
I guess why you would ask thequestion, and it's more so is
there an element of risk of ifwe go back to the day where
(43:25):
construction accounts for a muchlarger share of our GVA output?
How much are we leadingourselves open to a decline in
activity again?
What would be the impact onbalance sheets.
Speaker 1 (43:40):
Well, that's one thing that I'm getting at.
The other thing I'm getting atis like sort of circular
inflationary effects, likesecond, third order effects that
have.
I wrote a blog post a couple ofweeks ago about how it's
finally dawned on people that weneed, you know, 17 to 20
billion euros a year for housinginvestment.
That's to meet current targets.
(44:01):
But when we talk about thesehigher numbers, like those
numbers go up.
So you're talking aboutbringing in, uh, capital it has
to come from somewhere into theeconomy of 15, 20, 25, 30
billion euros per year.
And the knock-on effects ofhave to hire all those workers
to do all that.
They have to come fromsomewhere, right, so that's
outside ireland.
They have to be accommodatedsomewhere.
(44:21):
So, like we create a furthersqueeze on the accommodation in
order to later deliver moreaccommodation.
You know, have we, have wethought about those things?
Is anybody?
Is that factored into any ofthese forecasts?
Right?
Because obviously, if it getsmassive and then we have another
crash and in the meantimegovernments, as governments do,
(44:41):
will have spent all the taxrevenue that it will have been
generating, and then look aroundand be like what happened?
Where's all the money gone?
Um, but is any of that thoughtabout like that?
We just keep saying we needmore and more and more housing.
We don't really think aboutwell, how are we going to pay
for it?
Right, because the governmentcan't fund all of this.
Speaker 2 (45:00):
Absolutely not, and I do think it's positive that you
would have seen the Departmentof Finance report that came out
again only a month ago.
We've been back to back readingreports for the last few weeks
and they clearly acknowledgethat there was that of that, I
think it was 16.5 billion.
That would only get you toabout 40,000 units.
So we know that figure needs tobe higher, which probably
(45:28):
brings you to about the 20, thatthe bulk of that has to be
private delivery.
It's over 13.6 billion comesfrom the private capital, while
the remaining is public fundsPer annum.
Per annum exactly, and I dothink again it was highlighted
in the Housing Commission reportthey were very clear in stating
that the majority of capital tofund this needed to come from
the private sector, not public.
And again, you might have onlyseen it actually today or was it
(45:49):
yesterday that the Departmentof Finance yet again are kind of
speaking to Jack Chambers, ournew finance minister, in exactly
that commentary of highlightingthe importance of if we're
going to deliver more units, itneeds to come from a huge pool
of private capital.
And I think I suppose anelement of when you look at that
(46:11):
, even, let's say, the 13.6billion of private and we know
it's going to be higher becausethat's only for 40,000 units, so
it does need to be higher thanthat.
Is that even within thatthere's different kind of, I
suppose, risk categories of howlikely is it that it could come
from?
Because we all know at themoment there is certainly an
increase in the level ofactivity that's happening from a
social and an affordableperspective within the market
(46:35):
and any development activitythat is taking place that has
some form of an offtake from anLGA or an approved housing body.
So the land development agencyor the approved housing body
that there's a security of, Isuppose, exit from that.
So it is allowing for, there iscapital there for it and there
is appetite from the banks andfrom your lenders for that
(46:58):
specific part of the sector, sothat part will be funded.
I think where there is morerisk and I'm sure that you would
have potentially even strongerviews on this than what I would
is that element of the marketthat's looking at your private
rental market.
That is the part that has thelargest question mark over it.
If you were to divide upinstead of that 16.2 billion by
(47:20):
public and by private and divideit up by unit type and then say
, well, what capital is feedinginto each of those tenure types
maybe is a better phrase thanunit types?
It's this bucket over here withour private rental market that
there is the biggest concernover, and what is that total
investment volume that isrequired there and what are the
(47:42):
potential policies that arenumber one, off-putting it at
the moment, or two that couldimprove that risk appetite that
is there?
Speaker 1 (47:51):
Yeah Well, we chased most of that capital out with
lit pitchforks a couple of yearsago and from the conversations
that I have, it ain't comingback absent some significant
change.
So we wait with bated breath.
Now that the government havefinished publishing all their
reports, maybe somebody mightread them and actually enact
some policy change.
(48:13):
Well, we appreciate it.
We have at least one sole voiceof reason.
So look, go into your head then.
How many units, how many do weneed?
What do you think?
I'm not going to ask you forlike 10 years, but if you were
just able to do it in Lego, howmany units would you build?
24, 25, 26, next three years?
Speaker 2 (48:35):
Well, I don't have my own forecast, so I'm not going
to pretend I do.
I would also say, too, thatremember to what I said earlier,
in our conversation as well, isthat I think it's really
important that we don't holdourselves to one figure, that
there is a range and there's areason for that range there and,
as I said, it's to aid withthat planning the zoning
(49:00):
policies that are there as well.
But I do think it's back to.
Let's go back to our ESRIreport and the requirements that
were released by them.
So they said that, across the12 different scenarios and on
average per annum for theinitial time period so up to
2030, there was to be 44,000units delivered per annum.
(49:21):
Right On that high scenario,which is high net inward
migration, which I, from a dataperspective, I'm more leaning
towards that, that figure sitshigher.
It's about 52,000 units perannum.
But that's not where I stop andit's how we probably end back
up at that 80,000, is that theESRI made it very clear at the
(49:42):
start of their report that theywere solely estimating for
structural demand.
And well, what is structuraldemand, you might ask me.
Speaker 1 (49:51):
Who was going to ask?
Speaker 2 (49:52):
It is demand solely coming from future population
growth and demographic changes.
Ok, it does not account forhistoric unmet demand, of which
we know there is a significantamount.
So for the units we didn't build, For the units we didn't build
(50:13):
over the past decade or even 15years that we should have been
delivering to the market.
That estimate sits anywherebetween I think it's about 212,
but the top end of it is over250,000 units.
Is the unmet or the backstopthat needs to be filled or that
wasn't delivered over the lastnumber of years.
(50:35):
And really if you had a magicwand and I was able to in the
morning conjure up a lot ofworkers who were free and ready
to go out and deliver theseunits, and the planners and the
financers and everything thatgoes with it, you would want
that those unmet historic demandis delivered in quick
succession over the next numberof years.
That 250 is maybe broken downover the next four to five years
(50:57):
and added on top of that 59 or52,000 annual delivery figure by
the SRI.
So it's back to, as we said,that 80,000 seemed really maybe
scary or high at the start, butif we're combining of trying to
tackle the undersupply of thepast but at the same time ensure
(51:20):
that we're not ignoring ourpopulation growth that is taking
place right now but also everyyear from now, we certainly need
to be quite up over that kindof 70,000 or 80,000 over the
next several years.
Speaker 1 (51:35):
By the sums I just did, in my head there was
102,000.
Speaker 2 (51:39):
Do not quote that to me.
Takeda in the show tonightPredicts 100,000.
Speaker 1 (51:41):
Do not quote that to me, to Kate, and.
Speaker 2 (51:42):
Littles of Deloitte.
Speaker 1 (51:43):
Predicts 100,000 units a year.
Speaker 2 (51:45):
But it's a range.
I just think we need to tacklethat historical figure quickly.
Speaker 1 (51:48):
It's not the point though, like you say about the
range, is that we get caught upand head up in this stuff, but
actually we just need to get outthere and start building.
Speaker 2 (51:55):
Yes and not limit level of building, Because the
market will sort it out right.
Speaker 1 (51:59):
If we have too many, the house prices will decline,
and then there'll be less andthere will be a pullback as well
.
Speaker 2 (52:04):
I think again, if we were in a perfect world, you
would have a five, six yearperiod now where there is a very
high number of units that arebeing delivered, as I said, to
fill that backlog.
That's there and that it wouldtaper off then after that and we
would adjust as the market andthe demand requires it to do so.
But it's back to having therange and just making sure we're
(52:28):
not putting in place a cap or aceiling that limits an output
for a year or for two years,whatever it is, when we know
that there's both a structuraland a historic pent up demand
there that can also change quitequickly too.
Speaker 1 (52:42):
It certainly.
Yeah, makes a lot of sense.
Did I give you your magic wand?
I mean, you kind of took yourmagic wand there and you said
you were going to use it tobuild a backlog.
Are we sticking with that, ordo you have another magic wand?
I'll give you two, just becauseyou've been so good.
Is there anything else thatyou'd like to see changed?
It can be anything, it doesn'thave to be, you know.
Speaker 2 (53:04):
So what else would I like to see changed?
I think there's a number ofitems and one.
Don't worry, I won't go on fortoo long.
Speaker 1 (53:11):
One is more so a highlight too.
Speaker 2 (53:15):
And it's back to our population and our demographics.
And you're going to wonder isthis literally all I talk about
or think about every day?
But it consumes a large part ofmy brain.
I'm going to be honest.
Is that?
And it's almost of you know?
You asked the question earlierof did we see anything happening
in the data that would havesuggested that our population
(53:35):
was growing faster and maybe weshould ramp up our delivery
previously?
And the answer was yes, we sawit there, but it was difficult
maybe to act on it at the timefor various different reasons.
And there is another element ofthat population change that's
happening right now that isn'tgetting the narrative that I
believe it deserves, and that isthat changing that we have with
(53:56):
we have a rapidly expandingpopulation, but we also have an
ageing population, and we haveobviously Ireland at the moment
is one of the youngestpopulations in Europe.
It's one of our you'll see itas a badge of honour almost on a
poster for why invest inIreland?
But also because of that, thenwe're expected to see quite a
change in that older populationover the next number of years
(54:19):
and we are beginning to see anelement of it come through,
particularly from kind of, ifwe're to break it down.
You can break it down in manydifferent ways.
So maybe from 65 years up, orfrom 70 to 85 years up, and even
if we look back solely again,forget your future gazing and
look back at what is the currentdata telling us and we see
(54:39):
whether you break it down byeveryone over 65, everyone over
70 or everyone over 80, thatover the past kind of 10 to 12
years, there's been a growth ofbetween 40% and up close to 50%
within those age categories, andit is expected to increase
further over the next number ofyears as well.
There is no volatility in that.
(54:59):
That will happen.
It is a certain outcome.
But yet, in the same breath orvein, we have where between 2020
and 2023, a significant volumeof nursing home closures that
have taken place and actually areduction in the total level of
our long-term care beds that arethere, and we do see it as well
(55:25):
.
Even in Deloitte, I do a littlebit of work with the turnaround
and restructuring team, andcoming through in those
insolvency stats is continuouslya little bit of concern around
the nursing home sector as well,and it's all down to cost.
How is it, you know, managingthe cost within that area, and
we haven't had changes in, youknow, fair deal schemes and
(55:47):
stuff like that for quite aperiod of time, and it's just a
part of the market that I'mfearful of.
The data is telling us there's,like many other indicators,
there's no volatility with this.
Without doubt, our populationwill age and we need to be
catering the accommodation forthat, be it in a senior living
kind of style, all the way thenup to your more dedicated care
(56:07):
facilities.
And it's not getting anyattention.
If we're losing stock, not evenadding to it, losing it today,
where will we be in five yearstime, six years time, 10 years
time?
And now is the time to addressthat.
And my second magic one andI'll combine the two of these
really quickly is from anincentive perspective.
I know you believe that it'sgoing to be very difficult to
(56:28):
get investors back into themarket, and it's because there's
been no certainty therewhatsoever.
But we need to ensure thatthose incentives are there and I
think rental caps or rentalgrowth policies is one way of
addressing that.
That can't be pushed to theside and again, our lovely
Housing Commission report wasvery clear on that that the
current situation of those isnot working and should be
(56:50):
changed.
The IMF were clear on it lastyear and said it needs to be
changed.
Speaker 1 (56:55):
Yeah, it needs to be changed.
And again, like you say, withthe older people it is a
certainty Rent caps don't work.
It's been proved again andagain, and again.
Speaker 2 (57:04):
It aids the people of today, but not the people of
tomorrow.
Speaker 1 (57:06):
Yeah, and the people of tomorrow, as we all know, are
the future.
Thank you for that.
The point that you made aroundelderly accommodation is it's a
little bit like childcare.
I know there are opposite endsof the life spectrum but again
like childcare, huge problemCrash is very difficult to
operate, very difficult to makemoney, no real incentive for
people to open them, desperateneed for them.
(57:28):
Same on the other end, nursinghomes closing while the
population is getting olderMakes no sense.
Speaker 2 (57:33):
If you put time and energy into trying to help that
part of the market and I wantedto distinguish as well that
there's differences betweenalmost kind of senior living all
the way through to verydedicated kind of full time care
facilities as well is becauseyou know there's data out there
that shows that Ireland is atthe top of the league table in
the European perspective fromthe highest volume of under
(57:57):
occupied units.
So we're essentially using ourstock inefficiently when we
already have limited level ofstock, and a part of that is
down to our structure of ourhousing stock.
Fun fact, we actually have oneof the youngest housing stocks
in Europe.
If you compare it to the States.
It's very different as well,and I think it's because it's
(58:18):
back to how our economy evolved.
We went through a boom, maybemuch later than a lot of other
areas did, yes, but also withinthat.
So it's one of the youngest.
But it's also very different inthat we have a much higher
proportion of houses versusapartments, so we have a much
higher proportion of bedrooms toeach individual than what we do
, than what some of ourneighbours in Europe would have.
(58:39):
And there is an element ofunless I know, it's very, very
difficult for people to trade upand to trade down, but if we're
not providing the rightaccommodation to again
incentivise someone to leavethat four or five bedroom house
that only one or two people aremaybe walking around in every
day, to something within thatarea and of a category or a type
(59:00):
of accommodation they like,it's not going to happen.
But it would free up a housingunit for someone else in a
different stage of their life.
Speaker 1 (59:09):
Absolutely.
Speaker 2 (59:09):
it makes perfect sense If you were in business,
you'd try and use all yourresources efficiently, and we're
not doing that.
Speaker 1 (59:15):
We're not doing it, and there you know, and there's
a lot.
I saw a thing in the newspapera while ago, kind of having a
bit of a pop at people livingyou know, these empty nesters,
they call them.
Speaker 2 (59:27):
They're living in these big houses and they don't
need them, but where are theymeant to go?
Where are they to go?
Speaker 1 (59:28):
Exactly Say okay.
So the option is they selltheir house and then go where,
to a nursing home.
These are perfectly able-bodiedpeople.
They don't need the space.
Fine, but where?
And this is one of theconsequences of apartments being
so difficult and expensive toconstruct?
Pensioners are not for the mostpart.
I mean, there will always becorner cases, but they're not
(59:49):
going to want to go and spend700,000 euros on an apartment in
Balls Bridge.
No Right.
They need to have a niceaccommodation option that takes
account of their financialcircumstance, and our attitude
seems to be well, you own a, ahouse, so sell that and spend it
all on an apartment.
It just seems crazy thatthere's a complete ignorance of
this, and it's it's again anIrish thing.
(01:00:10):
We're storing this problem upfor probably 15-20 years time,
when there's going to be anabsolute crisis.
Speaker 2 (01:00:16):
And it's the same on the other end of the spectrum
too, of where we got rid ofco-living, which was also
another stage of the life cyclethat I think would have fitted a
certain cohort of ourpopulation.
So it's also about I thinkagain back to this idea of being
ambitious and realistic that weneed to be ambitious in our
thinking of well, what isaccommodation, what are the
(01:00:37):
different stages that arerequired, rather than solely
looking at it as a house or anapartment for a family of two or
three kids, because that's notwhat society is no, it's not.
Speaker 1 (01:00:47):
And it's again making policy for what we think should
exist rather than what exists.
I mean, co-living is one of thereasons, the ban on co-living
one of the reasons I started thepodcast to begin with, because
it was so nonsensical.
I mean, we didn't ban co-living, we just banned specific
planning permissions for it,because co-living is going on
all over the city and has been.
Anyone who lived in a houseshared.
That's co-living.
(01:01:07):
You're sharing a kitchen, right, that's it.
And when they want to try andprofessionalise that and put it
into a better scenario anddensify it, no, no, no, no, no.
We must not.
So listen, I don't want to getannoyed.
It's only Wednesday, ok, whatelse we got on here?
Did I ask you to recommend abook?
Speaker 2 (01:01:27):
Yes, you did.
Is it a good one?
What do you got?
So my book recommendation isI'm a little bit.
What I would say is I'm areader when I'm on holidays OK,
that's when I plough through mybooks.
Speaker 1 (01:01:38):
Well, you're too busy reading government reports.
Speaker 2 (01:01:40):
This is it when I'm working on a regular weekly
basis.
I actually don't read all thatmuch for pleasure, even though,
look, I find the likes of theESRI and the central bank
reports to me are veryfascinating as well.
So there is pleasure in them.
Speaker 1 (01:01:54):
But you're not going to recommend the central bank
report.
Speaker 2 (01:01:57):
I haven't sold myself as very cool in this context.
So when I do read for pleasure,then it's crime thrillers or
what I'm into, something with alittle bit of a twist, maybe a
little bit of a murder.
That's where my street is up,and my recommendation is a book
I finished earlier this year andit is by Steve Kavanagh.
It's called the Accomplice.
It is essentially about ahusband who is a serial killer
(01:02:21):
and we're trying to figure outwhere he is.
He disappeared and has left hiswife to deal with the trouble
of it, and the prosecution, Isuppose, are blaming her, and
she is up for jail and is tryingto figure out.
Where is he?
Who did he kill how many people?
And there's like every goodcrime thriller.
(01:02:41):
There's a lot of twists andturns towards the end that
genuinely had my mouth opengoing what?
So I would highly highlyrecommend it.
Speaker 1 (01:02:51):
Just a quick addendum here to say that we got
sidetracked talking about booksand I absentmindedly stopped
recording before I thanked Katefor coming on the show.
So, kate, thank you again.
It was a fascinating chat thatcould have gone on for hours.
You can follow Kate on LinkedIn, where she posts some genuinely
interesting insights into thereal estate market in Ireland.
There's a link in the shownotes.
Thanks for listening.
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