Residential land prices for the Irish property market: An initial examination

A noticeable data gap in the evaluation of any property market is that of a residential land price series. Land costs are one of the most significant components of housing construction, however many markets do not have accurate information on such prices. The Irish housing market, more than most has been subject to significant volatility over the past 25 years with key variables such as prices and supply fluctuating considerably. Consequently, the absence of a series on land prices is particularly acute in its case as it inhibits, amongst other issues, an accurate assessment of the determinants of housing supply. In this paper we avail of one approach popular in the literature which estimates the residential land price as the difference between the actual house price and the cost of rebuilding the property. Based on this, we generate a land price series for a number of Irish cities: Dublin, Cork, Galway and Limerick. Our series reveals that, while land costs rose sharply in the period referred to as the Celtic tiger, they fell significantly afterwards before recovering strongly in recent years. Our estimates also suggest that land prices are somewhat more volatile than house prices even though the latter have fluctuated considerably in the Irish market.