Cash Buyers In Ireland for 2014 – Nearly 53% of Property Market

New statistics suggest that there were 22,511 cash buyers in 2014 which is an increase of 38% from the 16,346 cash buyers in 2013.

The number of cash buyers is determined by comparing new mortgages figures, according to the Banking and Payments Federation of Ireland, to the total amount of home sales, according to the Property Price Register.

The number of new mortgages increased by 49.6 % from 13,472 in 2013 to 20,155 new mortgages in 2014(excluding re-mortgages and top-ups which do not reflect home buying activity).

Meanwhile, home sales for 2014 rose to 42,666 which is an increase of 43.1% from the 29,818 home sales registered for 2013.

These statistics mean that, while the number of cash buyers increased in 2014, they represented 52.8% of total home sales which is a marginal decrease from the 54.8% cash buyer rate for 2013. This highlights that the level of mortgage lending did not increase at the expected rate for July to Dec 2014 and that there were more cash buyers than expected. Also the announcement by the Central Bank in October that mortgage limits would be restricted in 2015, did not result in a surge in mortgage applications in a similar way to Q4 2012 when there was a significant increase due to mortgage interest relief being scrapped from 2013 onwards.

Nevertheless, the cash buyer rate is still significant and it is still higher than the cash buyer rates of 39% and 44% for the years 2011 and 2012 respectively.

The issue of cash buyers still dominating around half of the market is a symptom of a depressed mortgage market – 20,155 new mortgages in 2014 is a fraction of the 110,790 home buyer mortgages given out in 2006. It will be clearer in 6 months time whether cash buyers will be less dominant than they were in 2011.

On a quarterly basis, the cash buyer rates for Q1 2014 was 54.0% while the rates for Q2 and Q3 were 52.2% and 49.3% respectively. The cash buyer rate for Q4 2014 was 55.2%, the highest rate since Q4 2013 (55.4%).

The cash buyer rate for all of 2010 was 12%, however it is not known what the cash buyer rate was before that in the boom years as the number of home sales before 2010 are not available.

New mortgage statistics have been available since 2005 and the peak year of 2006 reveals that out of the grand total 203,953 new mortgages, 37,064 were for First Time Buyers (18.2%), 45,585 were for Mover Purchases (22.4%), 28,141 were Buy-to-Let mortgages (13.8%), 26,565 Re-Mortgages (13.0%) and 66,598 Top-Ups (32.7%).

The 2014 mortgage market paints a completely different picture with a grand total of only 22,119 new mortgages, of which 11,476 (51.9%) were for First Time Buyers, 7,649 were for Mover Purchases (34.6%), 1,030 were Buy-to-Let mortgages (4.7%), 503 Re-Mortgages (2.3%) and 1,461 Top-Ups (6.6%).

The cash buyer rate of nearly 53% for 2014 may come as a surprise to many people who have been led to believe that cash buyers constituted only around one third of the market in 2014. One body who is responsible for misleading the public is the Society of Chartered Surveyors Ireland (SCSI) who published a housing market report for Q2 2014 which said that cash buyers were significantly less dominant, with ‘cash purchases accounting for about 35% of the transactions in Q2.’ Clearly the real cash buyer rate for Q2 2014 was over 50% and the reason for this discrepancy is that the report notes that their 35% rate is obtained from data ‘based on 336 properties given by 46 individuals.’ (These 336 properties only represent 3.7% of all home sales in that quarter). While the report states that the report is ‘new and due caution must be exercised when interpreting the results given the low response rates for some questions particularly until the dataset is further developed over the coming quarter.’, the damage was already done as this report was then quoted by the mainstream press without mentioning the low sample number used for the findings.

What makes things worse is that you then have chief economist, Alan McQuaid from Merrion Capital, quoted in the Irish Times on 29th January 2015 as saying: ‘Although cash sales are not as high now compared with the start of 2014, they are still significant, accounting for roughly one in three of every transaction.’

Suggesting that cash buyers are dominating less of the market than in reality implies that there is a mortgage market significantly improving, when the best statistics available are suggesting otherwise.

Cash Buyers 2010 to 2014


Breakdown of Irish Banking Bailout by Bank – Compared to size of the banks

As most people know, the Irish banks were bailed out over a period of around 3 years, to a total of around €64 billion. A breakdown by bank of that amount is as follows:

  • Irish Nationwide Building Society (INBS) – €5.4 billion
  • Anglo Irish Bank – €29.3 billion
  • Bank of Ireland- €4.7 billion
  • Permanent TSB (formerly Irish Life & Permanent) – €4 billion
  • AIB – €19.8 billion
  • EBS – €875 million (which became part of AIB Group in July 2011)

One way to measure the scale of the banking crisis is to compare the bailout amounts to the banks’ operating profits in 2008, before impairments and tax (Bank of Ireland’s annual accounts ended in March 2009, while Anglo Irish Bank ended in September 2008 with the other banks ending December 2008).

Anglo Irish Bank comes out the worst with its bailout equating to 17.8 times the operating profit of €1.64 billion. INBS is a close second place with the bailout figure being 17.7 times its operating profit of €305 million for 2008.

In third place is PTSB with its €4 billion bailout being 16.3 times its 2008 operating profit of €245 million. In 2012, PTSB sold its Irish Life division for €1.3 billion bring the net bailout to €2.7 billion. However it is best to measure the scale of the banking bailout at the time the government had to first start recapitalising the banks, as they would have ultimately had to pay interest on the loans required for bailing out the banks. Even if the bailout is counted at €2.7 billion, then PTSB is still only one place behind.

Next is EBS with its bailout being 12.2 times its 2008 operating profit of €72 million. AIB is next in 5th place with its bailout equalling 7.3 times its 2008 operating profit of €2.7 billion. Bank of Ireland is therefore last with its bailout being only 2.5 times its €1.9 billon operating profit for the year ending March 2009.

The combined operating profits of the 6 banks are €6.86 billion which is 9.3 times smaller than the total €64.1 billion bailout.

Another way to measure the scale of the banking crisis is to work out the bailout amount per the number of employees at each bank, according to its annual reports.

Again, Anglo Irish Bank is the worst bank with its bailout of €29.3 billion equating to €15.7 million for each of its 1,864 staff at the time. Similarly the bailout for INBS works out at €14.03 million for each of its 385 staff in 2008.

The ranks of the banks now change places, with EBS coming next by having a bailout per staff of nearly €1.4 million for its 646 staff at the time. AIB has a bailout of around €765,000 for each of its 25,919 staff recorded at year end 2008. PTSB is close behind with nearly €729,000 required at the time for each of the bank’s 5,490 employees. Once again Bank of Ireland comes out the best with its bailout of €4.7 billion for 15,457 staff, working out at only around €303,000 for each employee.

The total amount of employees at the 6 banks was 49,791 at the time. With a total bailout at €64.1 billion, this works out at nearly €1.3 million per each member of staff.

Bank Bailout Figures




Ireland’s home building at 4 year high

There were 11,016 home completions in 2014 which is an increase of 33% from the 8,301 home builds in 2013. Home completions in Ireland for the years 2010 and 2011 were 14,602 and 10,480 respectively which are small numbers compared to the 26,420 home completions in 2009.

2014 home completions consisted of 5,171 (47%) detached houses, 3,595 (33%) semi-detached/terraced houses and 2,250 (20%) apartments.

Paul Melia of the Irish Independent has reported that home building is at an 8 year high- however that is simply not true from even looking at home completions for 2010 as mentioned above. Home completions for 2006 were 93,419 (which were half the amount of completions in the UK) and were 78,027 for 2007 – it will probably decades before home building is needed to be back to 2007 levels.

Progress of NAMA for 2014 – Over 50% Complete With End In Sight

The National Asset Management Agency announced today that it has redeemed a further €1 billion of NAMA bonds from the banks, bringing the total redeemed amounts to €16.1 billion which means that 53% of the €30.2billion in senior debt has now been paid back to the banks. The government agency, charged with taking over the distressed debt of 5 Irish banks in 2009, paid the banks a total of €31.8 billion in the form of €30.2 billion of NAMA bonds and subordinated debt of €1.6.

NAMA has been selling the banks’ former loans and assets to the highest bidders and accumulates the proceeds until the agency decides it has sufficient resources to be able to pay the banks back for some of these loans and so redeems the NAMA bonds.

The €31.8 billion that NAMA paid the banks went towards transferring loans which originally had a combined value of €74 billion. This means that the banks involved took a total discount of €42.2 billion which they were able to endure; as the total government bailout totalled €64 billion which was given to the banks over time, both before and after NAMA took over the targeted loans.

Over half of NAMA’s work relates to the two banks which later became IBRC (Irish Nationwide Building Society and Anglo Irish Bank) as the two banks received €16.8 billion for the loans (52.8% of total). It would be no surprise to most people that these two banks gave the biggest discount to NAMA – coincidentally the same discount rate of 61%. When IBRC was liquidated in 2013, the Central Bank took over the bank’s outstanding €13.7 billion of NAMA bonds with €1.1 billion of that later redeemed by NAMA that year, bringing the outstanding NAMA bonds in relation to IBRC at year end 2013 to €12.6 billion (this is not to be confused with NAMA taking over the €12.9 billion in debts IBRC had with the Central Bank at the time of liquidation, which has since been successfully repaid by the liquidators- the liquidation of IBRC relates to the part of the bank that was not transferred to NAMA).

AIB and EBS gave discounts of 56% and 57% respectively for a consideration totalling €9.4 billion (29.6% of total)

The most prudent bank, Bank of Ireland (currently the only bank to pay back all its bailout funds) gave a discount 43%-reflecting its more sensible relationship with developers- for €5.6 billion (17.6% of total). Permanent TSB was the only bank not to face the humiliation of NAMA taking over any of its loans as it is mostly a mortgages bank and so was not exposed to the spectacular losses of certain developers.

The €16.1 billion redeemed to date represents 50.6% of the total amounts originally paid to the banks, officially making NAMA past the 50% completion milestone- 2 years ahead of schedule.

Exactly 6 weeks ago, NAMA announced that it redeemed €15.1 billion of the total €30.2 billion in senior debt/NAMA bonds. This may have mislead many people into thinking that NAMA was halfway through its work at the time, as the total consideration of €31.8 billion should have been taken in to account, making NAMA technically 47.5% complete at that date.

As previously mentioned, at the end of 2013 €12.6 billion of bonds formally relating to IBRC, were still outstanding according to the Central Bank which means that €4.2 billion out of the original €16.8 billion NAMA bonds were redeemed leaving a progress rate at that time of 25%. The accounts for NAMA at year end 2013 reveal that the agency redeemed €7.5 billion in NAMA bonds, which out of a total debt of €31.8 billion, leaves a progress rate of 23.6%. This appears to indicate that the loans in relation to IBRC have been marginally more successful than all of the loans of NAMA. However two factors to bear in mind are that around 25% of the income of NAMA from inception to end of 2013 was from rental income, not from loan disposals, some of which may have gone towards redeeming debt in relation to IBRC. Another issue is that NAMA is accumulating certain proceeds to be able to lend to developers to increase the value of land associated with NAMAs loans – in other words it is delaying to a certain extent paying the banks back. It is therefore not fully known how successful the agency has been in dealing with each of the banks’ loans. Nonetheless, there is no evidence to suggest that the loans in relation to IBRC have been causing more of a problem than the other banks’ loans, as the general public would have considered the 2 banks that later became IBRC, to be the dodgy banks with white collar crime investigations.

Today’s announcement means that NAMA has redeemed a further €8.6 billion of its debt in 2014 alone (27% of total) which brings to 50.6% of the total debt redeemed since 2010 when NAMA redeemed only €0.75 billion in that year. The original plan of NAMA was to be 25% complete by the end of 2013 (which they nearly achieved), 40% complete by the end of 2015 and 80% complete by 2017.

NAMA plans to achieve redeeming 80% of its senior debt (76% of total debt) by the end of 2016.

According to the CEO of NAMA Brendan McDonagh, “Achieving this 80% target will require a substantial volume of NAMA loan and asset disposals in Ireland as well as Britain and elsewhere; for the most part, sales will involve commercial assets (offices, retail, hotel and leisure and industrial assets) or loans secured by commercial assets,”

Based on what the NAMA are saying and on looking at the progress made, particularly during 2014, the following completion milestones should be achieved:

  • 60% complete by June 2015
  • 70% complete by February 2016
  • 80% complete by October 2016
  • 90% complete by August 2017
  • 100% complete by March 2018

From reading between the lines based on what NAMA are saying, it looks like they won’t be selling loans at the same rate as they did in 2014 (unless they change their 80% completion target) as any profit the agency makes (which would increase by holding off selling loans in a rising property market) will go towards reducing the nation’s €64 billion banking bailout. NAMA only need to redeem a further €8.06 billion of debt in the next 2 years to reach their current target which is €540 million less than what they redeemed in the last 11 months alone. NAMA are now taking on the role of a developer to hopefully maximise the return for the taxpayer.

Irish Banks Account for 62% of Ireland’s Mortgage Market

At the time of the banking crisis in 2008 which badly affected Ireland, there were 6 Irish banks in existence. Two of those banks later merged together to form IBRC, and began liquidation proceedings over 4 years later, while the largest bank AIB bought the smallest bank EBS.

Clearly this leaves only 3 Irish banks left with AIB Group having the largest mortgage book with a value of €37.3 billion at the end of June 2014 which accounts for 27.5% of the total country’s mortgages by comparing these figures to Central Bank statistics for June 2014. Bank of Ireland had mortgages in the country totalling €26.3 billion during the same month (19.4% of the market) while at the same time, Permanent TSB had a mortgage book with a value of €20.3 billion (15% market share)

These 3 banks therefore have a combined share of 61.9% as at June 2014.

The next main mortgage player is Ulster Bank (owned by British bank RBS Group) which has a similar sized share of the market to Permanent TSB with a mortgage book in the Republic of Ireland worth €20.2 billion as at December 2013.

Danske Bank which bought the Irish bank NIB a few years before the banking crisis hit, had a mortgage book in Ireland worth €3.2 billion, according to the Accounts in Dec 2012 (in the unlikely event it has the same value today in a decreasing mortgage market, it would command 2.4% of the market) which has since been sold on to other lenders, some of which would not have been familiar to most people.

IBRC, the bank which announced liquidation in February 2013, had a mortgage book value of only €1.8 billion (concerning 13,000 customers as it was mostly a developer’s bank) according to its accounts for the second half of 2012, which would only give a market share of 1.3% based on June 2014 figures. These mortgages were sold off in tranches to the highest bidders, just like the Danske Banks mortgages.

In addition there are sub-prime mortgages worth around €3.3 billion (2.4% of market) which affect 18,000 customers, according to a parliamentary answer to TD Michael McGrath last summer.

The total of the mortgages book values mentioned, account for 83% of the Irish market. Other foreign owned banks would clearly account for the remaining 17%, such as KBC bank or any of the European and US banks with a banking license in this country who may not specifically advertise their mortgages to the Irish market.

The Central Bank mortgage statistics, used to determine the banks’ exposure to the mortgage market, as at June 2014, had a book value of €135.4 billion (906,762 mortgages), of which around 78% of the value concerned principal private dwellings and the reaming 22% involved Buy-To- Let mortgages.

Cash Buyers in Ireland for 2014, Likely to Dominate 48/49% of Property Market.

Cash Buyers
As most people would know in Ireland, cash buyers in the housing market have made up a significant proportion of the market in the last 3 and half years. In 2010 cash buyers consisted of only around 12% of the market for the year, when many potential cash buyers would probably have rightly seen that house prices had not yet bottomed, and so held out making their purchases until later. In 2011 cash buyers shot up to 39% of the market and rose further to consist of around 44% and 55% of the market in the years 2012 and 2013 respectively.
It could be argued that some cash buyers in 2013 were potential cash buyers in the previous 2 years but were still not convinced that prices had bottomed. As mentioned, cash buyers consisted of 55% of the market in 2013 but for the first 3 months of that year, cash buyers in fact consisted of 63% of the market! It turns out that period would probably been around the best time to buy for cash buyers, as according to the Central Statistics Office, home prices nationally increased by 12.5% in the year to June 2014 while Dublin house prices rose by around 25% in the same period.
The number of cash buyers is ascertained by comparing the number of home sales (according to the Property Price Register) with the figures for new mortgages from the Irish Banking Federation (excluding re-mortgages and top-ups).
For Q1 2010, there bizarrely appears to be 25 more new mortgages than the number of home sales that actually occurred in the same period. This could be attributed to new mortgage figures from the IBF being included in the previous quarter results, to when the home sales actually took place according to the register (as well as any errors in the register itself). Nonetheless, this indicates that there must have been little or no cash buyers in the first 3 months of 2010.
With cash buyers dominating the housing market in 2013, it has resulted in many people wondering where such a huge amount of cash buyers are coming from. While 55% of the market seems a lot with over 16,000 cash sales, the reality is that this is a small amount compared to the 110,000 new mortgages given out in 2006 (only 64,500 new mortgages given out in the 4.5 years to June 2014). Anecdotal evidence from home sellers appears to indicate that the cash buyers are mostly newly retired people who see a good annual yield to be made in property than having their savings with traditional investments, currently giving a much lower yield. So in short, it’s not so much that there are plenty of cash buyers out there, but a very depressed mortgage market – giving the illusion of a cash rich nation.
While the number of cash buyers in the first 6 months of 2014 has increased by nearly 28% compared to the same period last year, the good news is that 2013 should be the only year where cash buyers make up more than 50% of the market, as the number of new mortgages in the same period has increased by 60%.
Roughly 40% of the housing market activity occurs in the first 6 months of the year. For the first half of 2013, 37.3% of annual home sales occurred then, while 34.6% of the total new mortgages were given out in the same period.
There were 15,688 home sales and 7,463 new mortgages from Jan to June 2014. Assuming the number of home sales in this period consists of 37.3% of total annual activity, and the 7,463 new mortgages consists of 34.6% of total annual activity, just like last year, then total home sales for 2014 would be around 42,000 (15,688/37.3*100) and new mortgages will be around 21,500 (7,463/34.6*100). This would mean that there would be a total of around 20,500 (42,000-21,500) cash sales for 2014 giving an annual cash buyer rate of 48.8% based on these estimations.
This may seem more of a guesstimate but if the same type of calculations were made this time last year, the 2013 cash buyer rate of 55% would have been predicted with a 1% error.
According to the IBF there were 10,673 mortgage approvals in the first 6 months of 2014 which is an increase of 47.7% on the 7,226 mortgage approvals for the same period in 2013. The 7,463 new mortgages actually drawn down in the first half of 2014 therefore represents a draw-down rate of 69.9%. This suggests the remaining 3,210 (10,673-7,463) approved mortgages consist of people waiting until the next quarter to buy a home, unable to find a home or have changed their minds to buy a home. Therefore it could be argued that up to 30% of home seekers have been squeezed out of the market in the first half of 2014.
The mortgage draw-down rates for 2012 and 2013 were around 87% and 78% respectively which suggests that many people with mortgage approval were able to find a home. This information appears to contradict what estate agents have been saying in recent years in relation to people trying to look for a home but unable to find one. Also many people would have heard estate agents say that spring is a good time to sell your home. However, the Property Price Register contradicts such an assertion as less than 25% of home sales occur in the 3 months of spring (a good month to sell your home would be when home sales consist of more than 1/12th of annual activity).
Thanks to all this new information available from the IBF and Property Price Register, the potential home buyer has a much better picture of the true state of the housing market. With less than 25,000 new mortgages for 2014 mostly likely to happen, it is still a different housing market compared to 2006 with 110,000 mortgages (around 25% were buy to let which compares to a 4% rate for 2013).
Overall, there should be a cash buyer rate a bit below 50% for 2014, obviously lower than 2013 but still higher than the rate of 44% for 2012.

Number of Vacant Homes in Ireland for 2014 – Needs to be Addressed Before Predicting Home Building Requirements

Housing Statistics

How many homes that need to be built in Ireland is now a question often asked. This decision making process should involve analysing many factors including new home sales as a proportion of total home sales rather than predicting how many potential buyers want a new home. It appears that the Construction Industry Federation (CIF) were often the first port of call to answer such an important question of how many homes should be built every year in Ireland. The CIF used to publish new home statistics every year which were simply regurgitated figures from the Department of Environment, so often a newspaper article would follow, detailing the new statistics and quoting the CIF. However, the body has still not updated its website showing the 2013 total figure of 8,301 new homes (Their page showing new home completions from 1970 to 2012 is still available which was of vital use for journalists).

From Jan to May 2014, there were 3,941 home completions which is an increase of nearly 31% on the same period last year, meaning if the trend continues for all of 2014, there will be around 11,000 home completions this year. It’s worth noting that home sales from Jan to May 2014 are up 38% on the same period last year according to the Property Price Register (PPR).

The Economic and Social Research Institute (ESRI) predicted that there need to be 15,000 to 20,000 new homes constructed every year, and according to the UK government, 300,000 new homes need to be built every year, so per capita, that would be the same as saying around 22,000 new homes need to be built in Ireland. Since the ESRI estimates broadly tally with the UK estimates, one would assume that the ESRI have got it right on how many new homes we need, especially since home sales are increasing 23% more than the rate of home completions.

Except such an assertion ignores four points:

  • There were 230,056 vacant homes (excluding holiday homes) in Ireland from the 2011 census giving a vacancy rate of 11.9% (14.5% including holiday homes) compared to England’s vacancy rate of less than 3% in 2013. It is worth noting that the number of empty houses in the 2011 census of 168,427 is actually a decrease of 3.7% from the 2006 census but the number of apartments in the same period had increased by 48% to 61,629 (Vacant homes do not include homes under construction or derelict homes).
  • The Irish unemployment is around 1.8 times higher than in the UK meaning people there are more likely to afford a new home.
  • There is net immigration in the UK whereas in Ireland there is net emigration which is per capita, twice the UK number of net immigration (according to the respective estimates from the ONS and CSO).
  • There are a huge amount of mortgages in arrears in Ireland.

The Housing Agency report published in April 2014 identifies a supply needed of nearly 80,000 homes between 2014 and 2018 inclusive. The requirement for 2014 is around 9,500 homes and for 2018, it is nearly 21,000 homes according to this report. While this report seems to be more reflective of the situation than previous reports, it seems to be misinterpreted by some people, in that the report is stating the supply requirement and not necessarily implying that 80,000 homes need to be built over four years, due to the fact of the high vacancy rate across the country.

New Home Sales and Construction

From the 2011 census, the counties of Dublin, Meath, Kildare and Wicklow which all form the Greater Dublin Area (GDA) had nearly 26% of the 230,056 empty homes (29,681 vacant homes and 29,534 vacant apartments), whereas the population in the GDA represented 39% of the total state’s population and nearly 46% of the nation’s 2013 home sales occurred in these counties. In the GDA from April 2011 to May 2014, there have been 36,515 home sales and 7,912 home completions. Only 12% of home sales in these counties were new (around 4,400) showing that only so many new homes are currently being sold with around 3,500 left.

The 2011 census occurred on April 10th 2011 but for calculations I pretended the census took place on March 31st 2011. According the to Property Price Register (PPR) between April 2011 and May 2014, there have been 81,636 home sales of which 10,558 were new homes (The new home figures are extrapolated by downloading the figures to excel and filtering the data between new and old homes).

According to the Department of Environment, in the same 38 month period, there were 28,444 homes completed, meaning the 10,558 new homes sold in the same period represented just 37% of the number of homes actually built. The 3,663 new homes sold in 2013 represent 44% of the 8,301 homes built in 2013. Obviously the new homes sold were not dwellings that were just completed a few days before but could easily have been built a good few months beforehand and be included in previous years figures, but the comparison of new home sales with home completions from the two different sources suggest that new homes are not being shifted as fast as one might think. However 44% of new homes in 2013 being sold is progress on 29% of new homes sold in 2011 (April to December 2011).

Some of the border counties and Laois have the highest proportion of new homes sold since the census, at around 20%. Since these counties have a lot of new homes available, this suggests around 20% of home buyers would want a new home if there was one available. Based on current trends, it look like there are going to be around 40,000 home sales for 2014, and if 20% were new this would be around 8,000 homes which will be adequately covered by the 11,000 or so homes that will be completed this year.

Unfinished/Ghost Estates

Another factor to consider is that around 10% of homes on census night were new homes in unfinished estates (The census does not appear to reveal how many of the vacant 230,056 homes were new).

The 2013 Department of Environment report on unfinished housing (which takes place every year and involves assessing the number of units in all unfinished estates throughout the summer months) shows that there were 8,694 new homes that were vacant in these estates compared to 18,638 vacant units in the 2011 report. In the 2013 report, the 8,694 empty homes are revised down to 6,370 as the difference is 2,324 new vacant homes in estates no longer deemed to be unfinished (The breakdown by county, of the 8,694 is given in the report which is in the attachment). The report also lists 14,446 units in various stages of construction but when they are completed, they will simply be part of the standard home completion statistics.

Many of these new homes in unfinished estates that have been sold (9,944 between 2011 and 2013) could have been built before the census, meaning that they would have been an addition to the new homes built between April 2011 and May 2014 as listed above. This means that the homes built since the census would not have sold as well as it appears because of the backlog from the unfinished estates which are selling. Obviously, there would be an overlap with the statistics, in that some of the vacant homes in the unfinished estates would have been finished after the census and so is not an addition to the new homes built since then. Nevertheless, the vacant homes in these estates need to be taken into consideration when looking at the sale of new homes compared to construction in the same period, even though there is no precise way of finding out what proportion of these new homes in unfinished estates were completed before the census. In short, while 53% of homes in these estates have sold between 2011 and 2013, the new homes market will not be as transparent as it could be until all the excess homes built in the boom years are either sold or knocked down. The facts at least appear to tell us that a good proportion of these homes are in areas where people actually want to live since they are selling.

Second Hand Home Sales

Out of the 81,636 homes sold in the April 2011 to May 2014 period, 71,078 were second hand homes. Unfortunately there is no way to find out how many of these home sales involved buying a house that was vacant in the 2011 census. A simple way to solve this problem would have been for home sellers to fill out a form which could have involved ticking a box to say whether or not the home was listed as vacant in the 2011 census. This information could have then been incorporated into the PPR. Such a form could also ask how many bedrooms there are, if the home is new, or if it is a house or apartment etc.

Aside from other factors which affect housing vacancies, this leaves us in a position to only be able to roughly estimate rather than know more precisely, how many vacant homes there actually are which is not acceptable if we are to strive for a more transparent housing market.

As mentioned earlier, the vacant homes represent close to 12% of the number of homes in the country. Therefore a rough estimate to calculate the amount of the 71,078 second hand homes, sold since the census, that were vacant would be 12% of that amount. However, one could argue that the vacant homes were more likely to be sold than the occupied ones (due to deaths, moving in to a nursing home etc.) which could make an estimate of 20% more realistic, (although still a rough estimate) of 14,216 second hand homes sold which would reduce the vacant stock. From using this 20% estimate, the number of the vacant homes in the GDA that have since been sold would be around 7,300, and together with 3,500 new homes not yet sold, there would still be around 48,000 vacant homes in the GDA even before taking other factors into consideration.

Empty Homes per Population

From the 2011 census figure of 230,056 vacant homes, nearly 62,000 were apartments and by looking at a breakdown of where these empty apartments actually are, the city areas of Dublin, Waterford and Limerick each have the same proportion of one empty apartment for every 32 people living there. Galway and Cork cities have one empty apartment for every 45 and 43 people respectively. Next in line are Dun Laoighaire Rathdown and Leitrim which has one empty apartment for every 55 and 56 people respectively. Waterford County has by far the lowest proportion of empty apartments of one empty apartment for every 223 people with County Limerick in next place with one for every 176 people.

The breakdown of the 168,000 empty houses shows Leitrim’s 3,463 empty houses gives the county the highest proportion of vacant houses across the country with one empty house for every 9 people living there. It’s no surprise that Roscommon, Longford and Mayo are the next worst counties for the number of empty houses per population and that Dublin South has the lowest number of empty houses at a rate of one per 95 people.

Overall, in terms of both empty houses and apartments, the counties with the highest number per population in order, are counties Leitrim, Roscommon and Longford where the stock of empty homes in the 2011 census, would have been enough for Leitrim and Roscommon for 12 years and enough stock in Longford for over 14 years based on 2013 sales from the property database ( if you look at the number of empty homes for Leitrim and Roscommon and divide by the respective figures for 2013 home sales, you get the exact same figure of 12.27 years!). Dublin and its 3 neighbouring counties have on average one empty home for every 35 people.

Increase in Rental Properties

The Private Residential Tenancies Board (PRTB) annual reports for 2010 and 2011 lists 231,818 and 260,144 tenancies registered, respectively. An estimate for the number of tenancies registered at census time would be 238,900 (assuming tenancies were registered evenly throughout the year), which would be 50.3% of the total 474,788 rental properties in the 2011 census (or 78.2%  of the total 305,377 private landlord rental properties). The number of PRTB registrations as of July 2014 is 274,704 which is an increase of 15% from the census estimate. Since the registered private landlord tenancies at census time represented nearly 80% of the total such properties,  it may be fair to say that there are now more than 352,000 private rental properties in July 2014, which is an increase of nearly 50,000 rental properties since census time (ignoring any possible increase in local authority/voluntary housing).

One factor which may skew this estimate is the fact that after 4 years a tenancy has been registered; it is automatically removed from the register even if the same tenants are still in the property, a rule that may be unknown to some landlords (these figures suggest that there are around 66,000 private rental properties not registered). This increase of 50,000 or so more rental properties should greatly reduce the amount of vacant homes. According to the Irish Banking Federation there have been around 2,000 buy to let mortgages issued since the census (estimate made for April to June 2014) which would obviously be a factor towards the increase in rental properties. Another factor is that, from the census to March 2014 inclusive, there have been around 36,000 cash sales of homes. Since anecdotal evidence suggests many of the cash buyers are at retirement age, it would be unclear what proportion of these homes would be now be rented out or used as a home for retirement while their original home is either sold, rented out or left vacant. These factors could mean that the increase in rental properties have reduced the vacant stock by roughly 40,000.


There are around 28,000 (with around 80% aged over 65) deaths every year in Ireland. It is unclear how many of these deaths result in an empty home. According to the census, around 27% of over 65’s live on their own, which could indicate that deaths result in over 6,000 vacant homes every year.

Mortgage Arrears

According to the Central Bank of Ireland, in March 2014, out of a total of 762,454 mortgages (principal dwelling houses) in the state, 132,217 (17.3%) were in arrears of which 79,502 (60.1%) were in arrears for more than 180 days. At the same month, there were 144,686 buy to let mortgages with 39,361 (27.2%)  in arrears of which 27,161 (69%) were in arrears for more than 180 days.

Only 1,117 homes were repossessed in Q1 2014 (0.65% of the total 171,578 mortgages in arrears). If we were to assume that all mortgages (principal dwelling and buy to let) over 2 years in arrears will be repossessed, then more than 48,000 homes would be added to the market.

According to the Bank of England, in Q4 2013 only 1.9% of the UK’s nearly 14 million mortgages were in arrears which is a reduction of around 5% from Q3 2013. In the UK, there were 6,137 new repossessions in Q4 2013 which is 2.3% of all mortgages in arrears. This means that the home repossession rate in the UK is around 3.5 times more than Ireland’s rate of 0.65%. In other words, if we had the same repossession rate as in the UK, there would be around 15,700 homes repossessed in Ireland every year (171,578*2.3%*4 quarters).

According to the Central Bank of Ireland, between April 2011 and March 2014, there were 11,423 repossessions carried out.


One myth seems to be that the National Asset Management Agency owns a lot of these empty homes and that they are mostly to blame for not increasing supply of vacant housing on the market.According to NAMA, only 13% of its assets are residential (a further 10% are land assets). Since NAMA are going to reach the halfway mark this year, and 56% of the agency’s portfolio is in the state, this should mean that the value of its Irish residential portfolio on its books should be around 1.16 billion euro (€31.8 billion/2*13%*56%). If it is true that NAMA has around 15,000 homes then the average book value of these homes would be around €77,000 as most of the homes (10,000) were apartments last year (this is assuming that 56% of the value of the loans is in the state and not 56% of the number of loans).

NAMA has offered 4,000 properties for social housing, however only half of these properties have been deemed suitable by the local authorities for such housing. According to the agency, NAMA has delivered over 475 properties for social housing to date, with a target of 600 by year end.’ While NAMA does not have a lot of available housing for the buying market, it is committed to lending €2.5 billion to developers, up to the end of 2016. However, this will only include the provision of 4,500 new homes over the next 2 years as most of the development will be commercial.


To summarise the different points that have been made, the estimated number of vacant homes since the Census would be affected by the following predictions:

  • If sales of new homes in unfinished estates have reduced vacant stock by around 9,900.
  • If sales of second hand homes have reduced vacant stock by 14,200.
  • If the increase in rental stock have reduced vacant stock by 40,000.
  • If the provision of social housing have reduced vacant stock by 1,000 as lettings by NAMA to local authorities would not be included in the PRTB statistics.
  • If deaths have resulted the addition of 18,000 homes to the housing stock.
  • If the bank repossessions of 11,400 homes have added the same number to the vacancy stock.

These figures, when added or subtracted to the 2011 census figure of 230,000, would give a current estimate of 194,300 vacant homes in the country which gives a vacancy rate of 10% based on the 2011 stock or 12.7% including holiday homes. On top of this, the estimate for total stock in 2013 has risen 1.2% (which does not give an estimate for holiday homes), pushing up the true vacancy rate slightly higher.

The estimate of 194,300 ignores factors such as legal separation and divorce, as it is hard to know how many empty homes would result from this as for example, there could be a cross over with the figures for repossessions.

It also ignores the issue that some completed homes in ghost estates were demolished, although this would be a very small number as the little demolition that has taken place mostly involves homes that were only at a foundation level and never finished.

Also net emigration estimates of 30,000 people per year would result in some homes being made vacant; although a good proportion of these people are probably young who lived in the family home, but nonetheless there still would have been families who left after selling a home or renting it out.

The estimate also ignores the fact that not all of the new homes recently built have been sold. Also some holiday homes that may have been sold could now be part of the principal private residence market.

Obviously the many factors that influence vacant housing don’t directly result in a vacant home, such as for example, a family selling their home before emigrating may indirectly result in a home remaining vacant as the person who buys a home from such a family may no longer be a potential buyer of a home made vacant because of a death or repossession.

Even if half of the 71,078 second hand homes bought in the 38 months to May 2014 were ones that were vacant in the census, the vacancy rate would still be around 11.5% (based on 2013 stock estimates and assuming holiday homes have remained the same). In other words, if all of the second hand homes that were sold since the census only involved buying a vacant home, the vacancy rate would still be 9.8% (7.0% excluding holiday homes). Assuming 40% of all the activity from the 6 factors listed above occurred in the GDA, then the vacancy rate in this area would be around 6.2%.

If the ideal vacancy rate for Ireland is 5%, then there is still an excess of 96,000 homes based on these estimates. With the evidence suggesting that people actually want to live in a good proportion of these homes, we simply need new home building to be based on more facts.

Irish Housing Market 2005 to 2013 – mortgages, building and home sales

Housing Market

Housing figures released from the Department of Environment, Community and Local Government reveal that in Ireland, there were 8,301 homes built in 2013 (7,379 houses and 922 apartments) which is a decrease of 91.1% from 2006 levels of 93,419 homes completed. The 2013 figures, as shown in the link above, represent a decrease of only 2.2% from 2012 numbers which is not as bad as certain commentators were predicting.
In the UK in 2006 there were around 188,000 home completions which are just over twice the Irish number of 93,419. Assuming the UK population at the time was exactly 13.5 times more than the Republic, what happened here with irresponsible house construction would have been like the UK building over 1.2 million homes in 2006. In other words Irish home building in 2006 was, per capita, 6.7 times more than in the UK.
The statistics from the Irish Banking Federation (IBF) show that new mortgages (not including re-mortgages and top ups which don’t affect the housing market) in 2006 remained broadly the same from 2005 levels, while the numbers for home completions in the same period actually increased by 15.4%.
Unfortunately there are no statistics available for the number of home sales that occurred during the boom years so we are only left to speculate as to how many home sales there were compared to the 110,000 or so new mortgages given out in 2005 and 2006 (i.e. how many cash buyers there were).
Thankfully the new Residential Property Price Register gives a more accurate picture of the mortgage market since 2010. The figures from this database, when compared with new mortgage data from the IBF, can now give us accurate figures for cash buyers as a percent of the market (54% for 2013 compared to 12% for 2010).
The statistics for home completions as shown in blue in the graph have been available since 1970 and the IBF statistics have been around since 2005, obviously meaning that compiling such a graph from the 3 sources would not have been possible until recent years.
The IBF claim that their statistics represent more than 95% of the mortgage lending market in Ireland so there is a small amount error possible.
Also there may be a few duplicate entries in the property database and every time it is updated, the years 2010 – 2012 sometimes adjust by 1 or 2 entries. The property database is based on stamp duty payments so it should be very accurate because if you don’t pay the stamp duty, you don’t own your new home.
It’s worth pointing out that statistics for home completions are based on new ESB connections.
Most people in Ireland are well aware that there is plenty of talk as to how many homes should be built here.
Assuming we proportionally need the same number of new homes as the 2006 UK figure of 188,000, then over 13,500 homes would need to be completed every year compared to 8,301 (so around 5,000 more than current levels). There is one huge issue in this country, among others, that would contradict the assertion that we need such an amount of new homes built – the issue that in the census of 2011, there were around 230,000 vacant homes in the country which I will write about in my next post.