Eurostat population report indicate Irish population rose 6,000 in 2009 year – and the official figures from the CSO may show a net fall

The first entry on this blog in January 2010 dealt with a projection of the State’s population. This was partly to work out the need for housing and place that need in the context of the then-recent revelations about the 300,000 vacant houses. And since that first entry, the subject has been revisited on several occasions eg here and here. This week Eurostat released its population estimates for all EU states and shows that Ireland had a net population increase of 6,000 in 2009.

Here is the history of our population from 1987 to the present, sourced from the CSO.

The CSO analyses change by reference to April each year. The Eurostat figures are by reference to the calendar year end 31^st December. The Eurostat figures show the population increase in Ireland in calendar year 2010 to be 6,000. That is the smallest 12-month increase in population since 1990 when the population actually fell by 3,700. From the point of view of housing demand, and given that we have roughly 2.75 people per home in the State, the figures indicate that 2,180 additional homes will be needed. With estimates of vacant housing in the 35-350,000 range and with 6-15,000 new homes being built in the State, the projection of house prices, by reference to supply and demand, is that should the 2009 population characteristics continue, then prices will need come down substantially.

Another theme referred to frequently here is the fact that from the point of view of NAMA,  the Long Term Economic Value (LEV) Regulation forbids NAMA from using any analysis produced after10^th January, 2010 when assessing LEV. Up to 10^th January, 2010, the CSO were happily projecting on two migration scenarios – one that there would be nil net migration (net migration = immigration minus emigration) or that there would be highly positive net migration over the period to 2026. The CSO didn’t bother to even consider negative net migration. Of course the CSO produced their projections in 2008 before the full scale of the banking crisis became clear. However the DoEHLG adopted the projections and these projections have become the basis for the State’s Regional Planning Guidelines. They also determine future demand for housing and therefore are significant in determining the LEV of property. Which means that we risk overpaying for NAMA loans and NAMA making a loss.

Of course the Eurostat figures are for 2009. Might net migration reverse? Not according to the ESRI who (very late in the day) are forecasting large scale negative net migration upto 2015. My own view has been that the strong positive net migration between 1994 – 2008 (450,000) could reverse, particularly for EU-Accession States. For the next 10 years in Europe, will Ireland overperform or underperform the average with consequent impact on migration? Difficult to say, small open English-speaking economy with low corporate taxation and decent workforce versus the hungry central Europeans making up ground for 40 years of communism? Who knows, but the fact that the CSO didn’t even consider negative net migration was in my view reprehensible and may have the consequence of NAMA substantially overpaying for residential assets in the State.

And lastly why might the CSO figures show a population fall? The CSO population estimate for April 2009 was 4,459,300 and the Eurostat estimate is that the population at December 2009 was 4,456,000. What happened between January and April 2010? Difficult to say but anecdotal evidence would suggest emigration has continued at a high level – will natural growth between Jan-April 2010 less net migration be over 3,000? I would say the betting is against that.