Population forecasts are a vital tool for all aspects of economic planning. However, they are very difficult to complete accurately given the imperfect information that exists regarding input variables such as fertility, mortality and migration. Such difficulties multiply when one attempts to project population growth on a regional basis.
With this in mind, the regional population projections produced by the Central Statistics Office (CSO) last week were particularly interesting and noteworthy. The CSO provided regional population forecasts under six different scenarios based on assumptions on fertility, mortality and migration levels.
The forecast suggests that the Republic's population would increase to 4.2 million by 2011 and rise to 4.6 million in the subsequent 20 years. It predicts that there will be an increase in the percentage of people living in Dublin from 29 per cent in 1996 to 32 per cent in 2011 and 36 per cent in 2031. In contrast, the percentage of the population residing in the mid-east (Kildare, Wicklow and Meath) is projected to rise more modestly - from 10 per cent in 1996 to 11 per cent in 2031.
Such population forecasts have very significant implications for all aspects of infrastructural planning but particularly the housing market. At the time of the 1996 census, approximately 3.6 million people were living in the Republic in an estimated 1.1 million households.
Taking into consideration changing tastes, rising living standards, falling household sizes and the need to replace obsolete stock, this forecast suggests the total housing stock in the Republic would rise by almost 600,000 units in the 15year period to 2011. Allowing for construction activity since the beginning of this period, this suggests an outstanding demand for more than 400,000 units over the remaining years.
The population forecasts for Dublin are even more noteworthy. The population is forecast to rise from just over 1 million people at the time of the last census to 1.36 million by 2011, a 29 per cent increase. In housing terms, it suggests demand for approximately 215,000 residential units in the 15-year period to 2011. When construction activity since 1996 is factored in, it suggests an outstanding demand for almost 175,000 units over the remaining years. It equates to around 16,000 residential units each year.
Despite the recent construction boom, housing completions in Dublin have only ever exceeded 10,000 units in one year, 1999, when 10,035 units were developed. Given the current supply constraints, particularly labour constraints, it is difficult to foresee a set of circumstances where 16,000 units could be developed annually.
Indeed, a recent Construction Industry Federation report suggested that house-building in Dublin could actually fall by 20 per cent this year. This would fuel house price inflation in Dublin over the next 10 years.
Perhaps even more worrying would be the impact of such a population increase on the quality of life in an already congested Dublin. There are approximately 3,000 people per square mile in the city at present. If CSO forecasts are correct, this figure will rise to almost 4,000 people per square mile by 2011. Such an increase could not be sustained without a significant improvement in the infrastructure of Dublin - roads, rail, water supply and waste facilities among others. Though unlikely, it is not outside the realms of possibility that such an increase in infrastructural investment could be achieved. However, it seems impractical to have population density levels in one county approaching 4,000 people per square mile, while the figure in the rest of the State is around 100 people per square mile.
Forecasts for the rest of the country are more modest. The midlands's population is expected to grow by just 1 per cent, while the mid-west, southwest and west regions are forecast to grow by 12 per cent, 8 per cent and 13 per cent respectively. Given that the regional centres of Limerick, Cork and Galway are located in these regions, such a growth forecast appears to be very conservative.
It is clearly imperative that significant initiatives be put in place now if we are to stop the population explosion on the eastern corridor.
The CSO does qualify its forecasts by stating that specific policy initiatives, such as the National Spatial Strategy Plan, may have a large bearing on how future population trends evolve.
This at least suggests that the spatial strategy plan may encourage a more equal distribution of population and, therefore, economic activity throughout the State - which is essential if we are to ease the supply pressure that is building up along the eastern corridor.
This latest CSO report is timely. In the absence of a published blueprint for the future development of the State, it shows that current trends will result in a population explosion on the eastern corridor and a dearth of economic activity in the rest of the country.
The negative implications of this, both in terms of asset price inflation for the already scarce housing resource in the eastern corridor and in terms of physical congestion, would almost certainly undermine our economic competitiveness.
Any weakening of our competitiveness increases the economy's vulnerability to external shocks. It is therefore in everyone's interest that the blueprint for the future development of the Republic be published as soon as possible if we are to halt the mismanaged spiral of increased congestion on the eastern corridor and preserve the quality of life with which the Republic has become synonymous.
Marian Finnegan is an economist with the Sherry FitzGerald Group.
