Monday, January 15, 2018

Where do Ireland’s housing problems show up in the SILC?

The Survey of Income and Living Conditions gets a lot of attention for the income and inequality data that it provides.  But it is far more than that.  The SILC contains lots of information on housing and housing costs.  Some insight into what is collected can be found by looking the the section on the “household questionnaire” beginning in this fieldwork manual for the survey.  The previous post was a data dump of what the SILC can tell us about housing and some background to the measures used here can be found there.

The most recent data from the SILC is for 2016 and covers household surveys that took place between January 2016 and December 2016 with the reference period being the twelve months prior to the time the survey is taken.  So, for households surveyed early in 2016 the reference period can go back to January 2015 (which is now three years ago).

When looking for evidence of the impact of the ongoing housing problems it may be that they do not appear in a survey like this.  That is because a lot of the problems arise at the margin. That is, people looking for accommodation and/or people unable to find accommodation (to rent or buy).  Most households remain in their accommodation, are not looking for an alternative and do not experience any change.

However, it should be possible to identify some of the pressures that lead to people having difficulty finding accommodation.  Here we will look at:

  • Housing costs (particularly for tenants)
  • Housing overcrowding (including young adults living with their parents)

So let’s start with housing costs.  Eurostat provide a measure of “total housing costs” to disposable income.


In 2016, in Ireland the weighted average of housing costs to disposable income was 14.6 per cent and the median was 11.8 per cent of disposable income.  These are some of the lowest shares in the EU15 and show no increase in recent years.

Of course, tenure status may matter here and the impact of changes experienced by, say, tenants in the private sector, may be drowned out by a lack of change elsewhere.  Here is the distribution of households by tenure status in the 2016 SILC across the EU15.


In comparative terms we see that Ireland ranks high for people living as tenants with rent at reduced price or free and ranks low for people living as tenants with rent at market rate.

We will try to isolate changes for tenants.  Eurostat provide an average of the total housing costs incurred by tenants.  As discussed in the previous post this includes actual rent paid and any insurance, taxes or charges, utility bills or maintenance costs incurred by the tenant.  Thus, the measure of housing costs is fairly for complete for tenants.  For owners with a mortgage, the interest component of repayments is included but not the principal component.

Anyway, our focus here is on tenants.  Here are the housing costs of tenants in Purchasing Power Standard (PPS) units to allow a comparison across countries.


In 2016, tenants in Ireland had the fifth lowest housing costs in purchasing power units across the EU15.  What is surprising is the lack of increase in recent years with increases of averaging just two per cent showing since 2012.

One reason for this is composition.  The above includes all tenants.  Around 55 per cent of tenants in the 2016 Irish SILC pay less than the market price, e.g. rent from local authorities.  If, as we might expect most of the increase in housing costs for tenants arose for tenants paying the market price then this group were likely experiencing increases in housing costs of four to per cent per annum (and there would likely be variation within that again). 

A break of housing costs for tenants paying the market price and tenants paying less than the market price is not provided by Eurostat.  It would be useful if some breakdown along those lines was provided by the CSO but they do not tend to independently publish many (any?) findings from the SILC relating to housing costs.

Eurostat do provide rents paid as a share of disposable income for tenants.  Again though, it is for all tenants so those paying a reduced price and the market price will be included in the one category.  


As a share of the disposable income of households who rent Ireland has the lowest rents in the EU15 – and the share is falling!  It was 21.4 per cent in 2011 and had fallen to 19.6 per cent by 2016.

Of course this won’t be because rents have fallen; but because incomes have risen.  Here are the nominal mean incomes for both groups of tenants in Ireland.

SILC Disposable Income of Tenants CSO 2004 to 2016

From 2011, the mean disposable income of tenants paying the market price increased from €36,500 to €42,700.  Over the same period this increased from €25,200 to €32,200 for tenants paying less than the market price.

Eurostat measure the housing cost overburden rate as being the share of population living in households where total housing costs exceeds 40 per cent of household disposable income.  In 2016, Ireland had the second lowest housing cost overburden rate in the EU15.


Ireland might have the next-to-lowest level for all households but as with most of these measures there is plenty going on under the surface.  Here is the 2016 breakdown of the housing cost overburden rate by tenure status.


Ireland’s overall rate might be 4.6 per cent but for tenants with rent at the market price the housing cost overburden rate is 19.6 per cent.  Thus, just under one-fifth of tenants paying market rates had housing costs in excess of 40 per cent of their disposable income.  As shown here this has always being the tenure status with the highest rate in Ireland.


It may also be surprising how little this is changed over the past few years. Though there has been some increases for tenants paying the market price since 2013, the increases are unlikely to be statistically significant and the 2016 rate is pretty much bang on the average since 2004.

The picture is much the same if we reduce the threshold.  The next chart looks at the share of the population by tenure status where “total housing costs” exceed 25 per cent of disposable income.  Again tenants paying the market rate fare worst but lack of deterioration over recent years is again notable.


Here is a chart of the housing cost overburden rate for tenants renting at the market price across the EU15.  Ireland, has generally had one of the lower housing costs overburden rates for this group since 2004. 


Given increases in asking rents one might have expected the housing cost overburden rate for tenants paying market prices to have increased in recent years but that is not what the SILC is showing – up to 2016 at any rate. 

As “total housing costs” used to calculate the above shares and rates excludes capital repayments on mortgages a broader measure is used to give a full insight into housing costs, particularly if we want to look at all households not just those who are renting.  To this end, participants in the SILC are asked to assess the “financial burden” of their housing costs (including capital repayments on mortgages) on the scale of:

  • is a heavy financial burden,
  • is a financial burden, and
  • is not a financial burden.

Here is the share of people living in households who consider the impact of their housing costs  to be a heavy financial burden.


This is likely closer to what we expect for Ireland. The share of people living in households experiencing a heavy financial burden due to housing costs increased after 2007 and reached 43.3 per cent by 2013. It has since fallen back and was down to 32.4 per cent in 2016, though still the fifth highest in the EU15. 

The above pattern for Ireland is reflected in the pattern of arrears.  It should be noted that in the SILC arrears is measured as missed payments in the previous 12 months rather than a measure of the build-up of cumulative arrears in the past.


Of course, these measures of financial burden and arrears are probably more a function of the general performance of the economy as a whole rather than specific problems relating to housing.

Another indicator that may reflect some of these problems is overcrowding.   The Eurostat definition of overcrowding is here and in 2016 Ireland had the lowest housing overcrowding rate in the EU15 with no notable increase evident.


Again, it may be informative to look at this by tenure status which is shown.  Although there has been little or no change in the overcrowding rates for owner-occupiers in the past few years, an upward since 2012 or 2013 can be identified for both groups of tenants.


A final measure from the SILC which could reflect some of the ongoing problems is the share of young adults living with their parents.  Ireland’s doesn’t have a particularly high rate but the increase since 2013 is notable.

EU15 SILC Adults Living at Home  2004-2016

In 2013, 19.4 per cent of young adults in the SILC aged between 25 and 34 were living with their parents.  In the 2016 SILC this share had increased to 27.2 per cent.  Through all the measures of costs and overcrowding that is probably as a clear an impact that can be identified in the SILC of the ongoing housing problems.

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