Modelling the Impact of Fundamentals on County Housing Markets in Ireland

Ireland experienced a recent boom-bust cycle in the housing market. While the housing market in Ireland has been analysed at the national level there has been no research on the relationship between fundamentals and the housing market at the sub-national level. In this paper the spatial distribution of household changes is projected for the period 2011 to 2021 and this is used to consider the impact on housing demand, taking into account the significant overhang of vacant properties. Given the assumptions used the demographic projections indicate that the growth in number of households will be concentrate in and around the large cities and particularly Dublin. Given a smaller vacant stock and the projected growth in conjunction with small number of housing completions implies that the Greater Dublin Region will experience housing shortages. Formal modelling of the change in house prices, the stock of housing and the vacancy rate confirms that fundamental drivers are important in shaping these variables. Importantly, the estimated parameters confirm the emerging shortage of housing in Dublin and predict consequent strong growth in house prices.