For nine months now we’ve known that the Government’s housebuilding numbers are bogus and bear little relationship to the number of new homes actually being built.
And yet they're still being used by the Central Statistics Office to generate national income numbers; by the Central Bank to forecast economic growth; and by the Economic and Social Research Institute to assess the overall health of the Irish economy and the likely risk of overheating.
The fact that the Government has mistakenly used new ESB connections as a proxy for house completions, an error which is likely to have inflated the level of housebuilding here by 300 per cent, and is unwilling to admit the error, seems irrelevant to these venerable institutions, who pride themselves on providing accurate data about the economy.
As a sop to the controversy, the Department of Housing has set up an internal working group to examine how the current dataset might be improved, albeit without an admission of error.
Flawed system
The group meets on a quarterly basis; doesn’t include any of the industry experts that exposed the problem in the first place, or a representative of the ESB for that matter, and seems in no hurry to present alternatives to the current flawed system.
Tired of waiting for the department to act, Goodbody Stockbrokers recently produced its own housebuilding tracker based on the building energy ratings (BER), which put new housing supply for last year at 5,377, a fraction of the Government’s 14,932.
If this number is accurate, the jump to building 35,000 homes – the estimated level of demand in the market – is going to require a much bigger shift in activity and employment than anyone has considered to date.
Mindful of the political fallout, the Government appears unable to step back from its official numbers and seems intent on kicking the can down the road in the hope the issue will go away.
In the interim, we will continue to base our housing policy and frame our economic outlook on inaccurate data.
