Recent changes in the tenure status of households headed by an Irish or UK national

This is a companion to the previous post which looked at changes in the homeownership rates in the 1991 and 2022 censuses. Here we look at more recent changes in the tenure status for households headed by an Irish or UK national using figures kindly provided by the CSO.

From Census 2016 to Census 2022 the number of households enumerated headed by an Irish or UK national increased by 83,293, or 5.5 percent.  In 2022, these were 87 percent of the total households enumerated (and 89 percent of households where the citizenship of the reference person was provided, i.e. excluding “not stated”).

Here is the tenure status of households headed by an Irish or UK national in the last two censuses.

When looking at the changes, by far the largest absolute increase was for owner-occupiers, whose number increased by 48,522 over the period.  There was a rise in the number of outright owners without a loan or mortgage and a decline in the number of owner-occupiers with a loan or mortgage. 

In relative terms, the number of owner-occupiers rose by 4.4 per cent.  With the total increasing by 5.5 percent, this results in a decline in the home-ownership rate for this group from 75.3 percent in 2016 to 74.8 percent in 2022.  Households whose tenure status is “not stated” are excluded from the determination of the tenure rates shown in the table.

The next largest absolute increase was for social housing tenants. The number of households who are tenants of local authorities or approved housing bodies shows a rise of 20,741 over the period.  This is a 14.5 percent increase and resulted in the the share of households headed by an Irish or UK national who were local authority or AHB tenants increasing from 9.6 percent to 10.5 percent.

The next largest increase was for households who occupied a dwelling free of rent. There were a further 3,643 such households in 2022, though these remained less than two percent of all households headed by an Irish or UK national.  These are likely to arise due to intra-familial arrangements where the owner and occupier of the dwelling differ.

Of the possible occupancy statuses, the smallest absolute increase for households headed by an Irish or UK national was for those renting from a private landlord.  There were just an additional 360 such households in Census 2022, an increase of 0.2 per cent.  The share of these households declined from 13.4 percent in 2016 to 12.8 percent in 2022.

This does not tally with a property-owning democracy being replaced by a rent-paying one.

Indeed, related findings from the census indicate that we need more rental dwellings not fewer.  On Census night 2022, 33 percent of 25 to 29 year-olds were enumerated at their parents’ house.  The equivalent figure from 2011 was 24 percent. 

If the share of 18 to 35 year-olds living with their parents had stayed at the level it was in 2011, then almost 100,000 more young adults would have left the family home.  The number of households with a reference person aged under 35 declined from 367,000 in 2011 to 255,000 in 2022.

Part of this is demographics and aging, but a lot of it is due to the shortage of housing.  The share of the population aged 20 to 34 has declined from 23 percent to 18 percent.  However, the share of households with a reference person under 35 has declined from 22 percent to 14 percent.  If the share of households had just tracked population change there would be 70,000 more households with a reference person aged under 35.

If we were to crudely apply the actual tenure status rates from Census 2011 for the under 35s, then these additional 70,000 households would be split as 35,000 private rentals, 25,000 owner-occupiers and 10,000 social rentals or occupied free of rent.  However, the extra 100,000 still living at home are not the same as those living independently.

Most people when they leave the family home go initially to rental accommodation. Some of those still in the family home may be looking to buy, but most would choose to rent if reasonable options were available.  Ireland needs more of all types of housing but options for renters are far more restrictive then they are for buyers. 

The very large increase in the number of young adults still living at home can be addressed by providing more rental accommodation for these people to move out to.  At a point in time, private renting is a legitimate form of tenure status and is no less deserving of being provided for. However, almost all commentary and pretty much all policy is aimed at owner-occupiers. Units provided for renters are considered a "home lost".

As the opening table of the post shows, since 2016 there has been an 48,500 increase in the number of households headed by an Irish or UK national who are owner-occupiers.  Over the same period the number of such households who are renting privately increased by 360. 

For every one additional household headed by an Irish or UK national who became a private renter, 135 became owner-occupiers. 

In the inter-censal period, April 2016 to March 2022, separate CSO figures show that there were 79,500 market transactions by first-time buyers.  On an annual basis these are currently running at 17,500 per 12-month period.

If we look at the homeownership rates derived from the census we can see the decline in recent decades.  However, most of this decline took place in the first decade of this century. 

From Census 2002 to Census 2011 the homeownership rate declined from 80 percent to 71 percent.  From Census 2011 to Census 2022 the decline levelled out considerably with a further fall to 69 percent. 

Part of the reason the decline is moderating is because people are staying in owner-occupied houses for longer – their parents’ houses.  With more options, people could get out of the family home and set up their own one-person or two-person households – in suitable rental accommodation.  They could then look to join the buying brigade down the line.

Just how upside down things have got can be see by these two recent postings on Daft.ie:

• https://www.daft.ie/for-sale/apartment-apartment-12-the-mall-maryborough-woods-douglas-co-cork/5664846
• https://www.daft.ie/for-rent/apartment-apartment-10-millbrook-carrigaline-road-douglas-co-cork/5644412

These two 2-bed apartments are a short distance from each other in the Douglas area of Cork city.  The property for sale is listed at €275,000. The property for rent is listed at €2,200 per month.

At an interest rate of five percent, over 20 years, the monthly repayment on a mortgage of €240,000 would be €1,600 per month.  That’s €600 a month to help cover the additional costs of being an owner-occupier, though obviously without the flexibility of being able to move easier.

If the sale and letting were to happen at the advertised prices it would give a price-to-rent ratio of just over ten.  By international and recent historical standards in Ireland this is low. Remember this?

Again, something does not feel right.  Then it was prices that were far too high; now it is rents.

There is lots of evidence that the squeeze is most acute in the private rental sector.  As shown in an earlier post here are the housing-cost overburden rates for renters and mortgagors across the OECD.

And this only reflects those who are actually in rented accommodation.

To repeat what we saw at the start.  Since Census 2016, there are an extra 83,300 households headed by an Irish or UK national. Of these, the increase can be split as:

• 48,500 owner-occupiers
• 20,700 social housing tenants
• 3,600 occupied free of rent, and
• 360 private renting

with a 10,000 increase in the number of “not stated”. If a ratio of 135:1 is the natural order of things, then fine, but it seems more than a little extreme and is just going to result in more young adults having to stay at home for longer.

The impact of “not stated” and migration on Ireland’s home ownership rate

The census is a key source of reliable information on population and households in Ireland.  One important indicator taken from the census is on households’ tenure status: split between different types of owners and renters.  Since the publication of the census results on housing there has been considerable focus on the decline of Ireland’s homeownership rate relative to its peak in 1991.

In the 1991 Census, there were 808,385 households enumerated as owner-occupiers from a total number of permanent households of 1,019,723.  That gives a homeownership rate of 79.3 per cent. 

By 2022, the number of owner-occupiers had increased by almost 50 percent to reach 1,210,925.  However, the total number of households had increased by 80 per cent and there were 1,836,728 permanent households enumerated in Census 2022.  Thus, the homeownership rate was reduced to 65.9 per cent.

Here we will consider the impact of two factors on the change in the homeownership rate from the 1991 to 2022 Census:

1. Households whose tenure status is “not stated” on their census form, and
2. The change in the resident population due to migration

A subsequent post looks at recent changes in the tenure status of households headed by an Irish or UK national and examines how the housing squeeze is much more acute in the private rental sector, yet it is owner-occupiers that capture all the attention.

TENURE STATUS “NOT STATED”

In the 1991 Census, there were 9,396 households who were recorded with a tenure status of ‘not stated’.  This was equivalent to 0.9 per cent of the total number of permanent households. 

The table above is taken from the Census 1991 report on housing.  It is notable that this report was one of the last to be produced and was not published until February 1997, highlighting that this was not a priority area for results and publication.

In contrast, for Census 2022, the report on housing was the second to be published.  In this instance there were 80,235 permanent households whose tenure status was not stated on their census form.  This was equivalent to 4.4 percent of households.

One reason for the rise in “not stated” is the use in recent censuses of Reconciliation Forms for known households that did not return a census form.  Compliance with the census is high but not universal.  The CSO note that in 2016, just over 20,000 households were enumerated using Reconciliation Forms.

This makes the population count more accurate – which is, after all, the primary purpose of the census – but does impact other indicators taken from census data.  Part of the reason for the decline in the headline homeownership rate is due to the increase in the share of households whose tenure status is not stated. 

By definition, the census data cannot tell us anything about the  tenure status of such households.  Saying that homeownership has declined in favour of “not stated” is pretty meaningless.

Thus, it would be better to calculate such rates using only those households for whom a tenure status is known.  Using the numbers above this would give a base of 1,010,327 households in 1991 and of 1,756,493 households in 2022.  The amended homeownership rates become:

• 1991:   ( 808,385  / 1,010,327 ) x 100 = 80.0%
• 2022: ( 1,210,925 / 1,756,493 ) x 100 = 68.9%

Among households whose tenure status is known the homeownership rate declined from 80 per cent in 1991 to 69 percent in 2022.

MIGRATION

The second factor to be considered is migration.  As noted in an earlier post, the Ireland of 2022 is very different to that of 1991.

In the 1991 Census, 98.4 per cent of the population of 3.5 million was born on the islands of Ireland and Great Britain.  The equivalent figures for the 2022 Census were 85.4 per cent of a population of 5.1 million.  The number of people living here who were not born in Ireland or Britain went from 55,000 in 1991 to 730,000 in 2022.

Beginning with Census 2006, the CSO published a breakdown of tenure status by the nationality of the reference person of the household.  They have now also kindly provided a similar breakdown for the 2022 Census by the citizenship of the reference person of the household.

For 1991, the overall homeownership rate of 80.0 per cent can be taken as that for households headed by an Irish or UK national.  Other households made up such a small proportion of the population that they could not significantly move the homeownership rate.

In 2022, there were 237,560 households with a reference person who was not enumerated as an Irish or UK citizen.  Of these, there were 48,221 households where the citizenship of the reference person was not stated, giving 189,339 households with a reference person with a citizenship other of Ireland and the UK.  Thus, households headed by a non-Irish or non-UK citizen were 10.6 percent of households enumerated in the census (excluding not stated). 

Across the world, the homeownership rate of immigrants is typically found to be lower than that of native populations.  In Census 2022, the homeownership rate of the near 190,000 households headed by a non-Irish or non-UK citizen was 24.3 per cent. This will impact the overall result.

The details provided by the CSO show that the homeownership rate in Census 2022 for households headed by an Irish or UK citizen was 74.8 per cent.

Thus, while the headline homeownership rate in the census declined from 79 percent in 1991 to 66 percent in 2022 we note that:

1. If households whose tenure status was “not stated” on the census form are excluded the decline in homeownership is from 80 percent in 1991 to 69 percent in 2022, which better reflects the overall change in the homeownership rate in Ireland, and
2. If looking at households headed by an Irish or UK national the decline is from 80 percent in 1991 to 75 percent in 2022, which better reflects the change in the homeownership rate for the native population.

On the Price and Quantity of Housing

Housing problems are complex but usually can be distilled back to a shortage of housing relative to demand. For those looking, it can be difficult to find somewhere to live, particularly for renters.  More housing makes it easier to find somewhere to live, though sometimes this is in dispute. 

Earlier in the week we had a opinion piece that focused on prospective homeowners with a broad focus on price and a limited view on supply.

On Price

The piece sets out findings of research undertaken by the Bank of England:

For every 1 per cent increase in lending rates, the researchers of Threadneedle Street found a commensurate 3 per cent decrease in house prices, and vice versa.

[.]

Another significant determiner of house prices is population growth. For every 1 per cent increase in the natural growth of households since 1990, the UK researchers found a 2 per cent increase in house prices. The same 1-to-2 per cent ratio also applies to immigration – people coming to work here.

[.]

And the third factor: wages. Each 1 per cent rise in incomes results in a 2 per cent rise in house prices.

[.]

Finally, housing supply itself. A 1 per cent increase in stock (some 20,000 houses) should theoretically reduce prices by 2 per cent.

The precise source isn’t provided but we will just taken them as given in the piece.  We will use the most recent intercensal period, 2016 to 2022, to do a crude approximation of the impact of these estimates if applied to Ireland.

Central Bank data shows that the interest rates on new business mortgages averaged 3.50 per cent in 2016. For 2022, this has declined to 2.68 per cent.  This gives a decline of 0.82 percentage points (which seems more relevant than the 30 per cent reduction)

The population data from the Census shows an 8.1 per cent increase over the same period.  The annual data from the Employment Costs Survey shows the yearly earnings of a full-time employee rising from €45,640 in 2016 to €54,189 in 2022, an increase of 18.7 per cent.

And again using the Census, the housing stock increased from 2,003,645 in 2016 to 2,112,121 in 2022, an increase of 5.4 per cent.

Applying the Bank of England’s estimates gives the following impacts on prices:

• Mortgage Rates: –0.8 x 3 = +2.4
• Population: +8.1 x 2 = +16.2
• Annual Earnings: +18.7 x 2 = +37.4
• Housing Stock: +5.4 x –2 = –10.8

It is all very crude but the sum of those impacts is +50.6 per cent.  The CSO’s residential property price index went from 107.5 in 2016 to 164.0 in 2022, a rise of 52.6 per cent.  I don’t know, it’s like this supply and demand stuff works, or something.

However, the negative impact on prices of the increase in the housing stock is dismissed in the piece because prices haven’t fallen as the housing stock has increased and “are at their highest level since the Celtic Tiger.” 

But the price effect of the increase in the housing stock is there! And, as done here, can be shown using the estimates provided in the piece.  Using those shows that house prices in 2022 would have been 10-11 per cent higher if there had been no increase in the housing stock since 2016.

The increase in the housing stock reduced house prices relative to what they would have been if that increase hadn’t occurred.  This is how supply and demand models work: relative prices, ceteris paribus etc.

The piece is right that interest rates have been a key driver of house prices in recent decades.  We examined that here which showed that even though price to income ratios have increased in Ireland, indicative initial mortgage payment to income ratios are actually lower than they were in the 1970s and 1980s.  This is the final chart from that post:

As was pointed out in the previous post it is with the deposit required that the most significant increases have been seen.  Higher nominal house prices (due to lower interest rates) have seen the amount required for a 10 per cent deposit rise from around a quarter of the average annual household income in the 1970s and 1980s to almost a half of household income now.

Ireland does not stand out as having unusually high mortgage payment burden. Here is OECD data on the median mortgage burden as a share of disposable income for owners with mortgages (with data for all bar five OECD member countries).

For newer and possibly larger mortgage burdens we can look at the housing cost overburden rate.  This is the share of households where housing costs consume more than 40 per cent of disposable income.  In this instance OECD data for both owners with mortgages and private tenants are provided.

Ireland is hard to locate in Panel A because Ireland has one of the lowest housing cost overburden rates for owners with mortgages in the OECD.  In Panel B it can be seen that Ireland has one of the highest housing cost overburden rates for private tenants in the OECD.  Whose plight is in need of easing?

On Quantity

The piece takes a very limited view of quantity: it’s new houses for first-time buyers or nothing, and is best represented by this paragraph.

In Dublin city last year, 94 per cent of all new housing was apartments, 98 per cent of which were for rent. First-time buyers there bought just 75 new houses. In Cork city just 3.5 per cent of all new housing was sold with first-time buyers buying 17 new houses. In 2017, over 80 per cent of all new scheme houses (what the CSO calls housing estates) was sold on the market, and last year that was 52 per cent. Individual buyers have been sidelined and forgotten by successive governments.

The figures for the Dublin City local authority area are correct but they are limited.  Per the CSO, there were stamp duty filings for 1,975 first-time buyer transactions in Dublin City Council’s (DCC) area in 2023. That’s a long way from 75.

The difference, of course, is explained by the most frequent type of property that is transacted: existing ones. Dublin City has a housing stock of around 250,000 units.  That most of the supply for first-time buyers comes from this should not be a surprise.

We can get insight into the composition of the housing stock in DCC’s jurisdiction from the Census.

The area has 150,000 houses – 60 per cent of the stock.  If 50,000 apartments are added, houses would still make up 50 per cent of the stock.  3,200 apartments were completed in the DCC area last year.

We can start to see if “individual buyers have been sidelined and forgotten” by looking at the national tenure status figures from the Census.

From Census 2016 to Census there was an increase of almost 140,000 in the number of households in Ireland.  Of this increase, 63,400 were owner-occupier households.

Somewhat unusually the next largest increase was for the “not stated” category.  Then comes the increase for tenants of local authorities and approved housing bodies which increased by just over 23,000.  The fourth largest increase was for households renting from a private household which made up 15 per cent of the total increase in households over the period.

The supplementary data to the CSO’s residential property price index gives details of the number of transactions. Between Census 2016 and Census 2022, stamp duty filings were made for 80,000 FTB transactions.  The figures show that there were 17,500 FTB transactions in 2023.

The breakdown shows that there were 5,000 FTB purchases of new properties and 12,500 FTB purchases of existing properties.  For the whole of Dublin, i.e. County Dublin, there were 5,000 FTB transactions last year.

On top of purchases, there will also be first-time owners due to single or one-off houses that are built for the occupier and will not have a stamp duty transaction to record.  5,500 single houses were completed in 2023.

On Homeownership Rates

Homeownership rates are used to highlight the plight of prospective buyers.

As the proportion of new housing for sale plummets, despite increasing overall supply, our home-ownership rates follow suit, and are now below the European average at just 66 per cent. Thirty years ago, 81 per cent of households owned their own home. That is a staggering drop in a short space of time, but the Government is remarkably silent on (or oblivious to) the issue.

Ireland’s homeownership rate has declined since 1991 but the Ireland of 2022 is very different to the Ireland of 1991.

In the 1991 Census, 98.4 per cent of the population of 3.5 million was born on the islands of Ireland and Great Britain.  The equivalent figures for the 2022 Census were 85.4 per cent of a population of 5.1 million.  The number of people living here who were not born in Ireland or Britain went from 55,000 in 1991 to 730,000 in 2022.

It is true that the overall homeownership rate declined from 80 per cent in 1991 to 69 per cent in 2022 (when households with a tenure status of ‘not stated’ are excluded).  However, what the various census results show is that this decline occurred from 20o2 to 2011, during which the rate declined from 80 per cent to 71 per cent.  The homeownership rate for All Households has been relatively stable since 2011.

The above chart also shows some outturns for homeownership by nationality – specifically the homeownership rate for all households and for those  headed by an Irish or UK national. 

As discussed, this was essentially the entire population in 1991, when the homeownership rate was 80 per cent.  The first time a breakdown of homeownership by nationality was provided was with the 2006 Census. 

Thus far, no results for homeownership by nationality have been published by CSO for Census 2022.  Going back to Census 2016, the homeownership rate for households headed by an Irish or UK national was 75 per cent.

Going from 80 per cent in 1991 to 75 per cent in 2016 is a decline, but not a staggering one.  The significant change in Ireland has been in the proportion of the population who were born somewhere else. 

In line with the experience elsewhere, immigrants have lower homeownership rates. Of the 150,000 households in Census 2016 not headed by an Irish or UK national, just 22,800 were owner-occupiers, giving a home-ownership rate for this cohort of 16 per cent.  Nearly three-quarters of such households are private tenants.

Finally, on homeownership rates, it should be noted that they are based on households that actually exist.  If there is not enough housing people may stay in owner-occupied households longer than they want to.  We previously noted that in the recent Census, Ireland was short around 70,000 households headed by under 35s.

Between 2011 and 2022 the number of people aged between 20 and 34 declined by 11 per cent.  However, the number of households headed by an under 35 declined by 30 per cent.  Many of these people are living in owner-occupier households but they are not the owners; they are living with their parents.

There has not been enough analysis of the impact of current policies. Some 68 per cent of Irish 25-29 year-olds live with their parents; in Finland this is 5.7 per cent.  We should be discussing that, or how a policy obsession with urban hyper-density housing and homes unsuitable for families has created unsustainable commuter sprawl under a Green Minister for Transport.

There is no doubt that there are more people living with their parents for longer, but a figure of 68 per cent is outlandish.  For a start, around a quarter of the population aged 25 to 29 are non-Irish citizens (69,000 out of 296,000 in the latest Census). It seems unlikely that a large share of those are living with their parents.

The figure comes from the SILC, and the CSO have set out the differences in figures for young adults living at home in this useful note.  In the 2022 Census, 33 per cent of young adults aged 25 to 29 were enumerated at their parent’s house on Census night.  This is still a high figure.  It is much higher than it was in 2011 (24 per cent) and far, far higher than it is in Finland.

If the share of 18 to 35 year olds living with their parents had stayed at the level it was in 2011, then almost 100,000 more young adults would have left the family home.  We might ask how does Finland do it.

They are not doing it through homeownership. Recent figures from Statistics Finland show that “eighty-one per cent of household-dwelling units of persons aged under 30 lived in rented dwellings.”  A household-dwelling unit is formed by all persons living permanently at the same address.  Separate figures show that they also tend to live alone.

Here are the population distributions for Ireland and Finland by type of household.

Over 20 per cent of Ireland’s population lives in households of three or more adults. These are the households of young adults living with their parents or young renters sharing a semi-d. In Finland less than four per cent of the population live in households with three or more adults. 

On the other hand, in Finland, nearly 16 per cent of the population are people younger than 65 living alone.  In Ireland, this group is six per cent of the population. 

Ireland has lots of dwellings that are suitable for families.  Over 85 per cent of our housing stock are houses, with 1.8 million houses in a total stock of 2.1 million dwellings.  What we don’t have, if we are emulate Finland,  are sufficient dwellings for households of one or two people, especially renters.