Development plan · Donegal County Council
County Donegal Development Plan 2024–2030 (As Varied)
The council's development plan written statement: its strategy, policies, objectives and development standards.
Donegal County Council · 2024–2030 · 783 pages
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- County Donegal Development Plan 2024-2030 (As Varied) 58 Chapter 6 HousingChapter 6 Housing Chapter 6 – Housing 6.1 Housing Strategy 6.1.1 Introduction National Policy Objective 37 of the National Planning Framework (NPF) provides for a Housing Need and Demand Assessment (HNDA) to be undertaken in each local authority area to ensure that longterm strategic housing needs are met. In April 2021, the Department of Housing, Local Government and Heritage published a new HNDA Tool supported by ‘Guidance on the Preparation of a Housing Need and Demand Assessment’. The HNDA Tool assesses housing need using statistics on the economy and housing and has been used to give broad, long-run estimates of housing need for County Donegal. This HNDA focuses on the period out to 2030 and follows the format as suggested by the aforementioned Guidance and is set out over 5 Sections, namely; • Housing Market Drivers • Housing Stock and Housing Need • Housing Need and Demand Assessment (application of the HNDA Tool) • Specialist Provision • Conclusions 6.1.2 Key Housing Market Drivers This section addresses part 1 of the HNDA analysis in line with the ‘Guidance on the Preparation of a Housing Need and Demand Assessment’ and relates to the identification of key housing market drivers, including household formation, population, housing affordability, incomes, house prices, rent levels and key drivers of the local and national economy. Following the analysis of the housing market drivers, table 6.6 summarises the key areas that may impact the results of the HNDA. The table is divided into three segments: • demographic issues • affordability issues; and • economic issues for the local housing market. 6.1.3 Population Trends Census 2016 results showed that Ireland’s population stood at 4.76 million. Preliminary results from census 2022 indicate an 8.1% increase in this figure, giving a total population of 5.14 million. County Donegal recorded a population of 159,192 persons in the 2016 census. Preliminary results for the 2022 census indicate a total population of 167,084 persons (an increase of 7,892 or 5%). This puts the county back on an upward trajectory in population terms, having previously seen a 1.2% decline in population between the 2011-2016 census period. In terms of trends going forward, the NPF sets out projected population targets to 2040, together with projections for the intermediary years of 2026 and 2031 (see table 6.1 below). A projection for the year 2030 has been interpolated based on the 2026 and 2031 projections.
- County Donegal Development Plan 2024-2030 (As Varied) 59 Chapter 6 HousingChapter 6 Housing Table 6.1: Population Projections for County Donegal Year 2016 2026 2030 2031 Population 159,192 173,500-176,500 178,300-182,100 179,500-183,500 Table 6.2 below provides details of existing and projected5 populations in (i.) the regional growth centre of Letterkenny, (ii.) the towns deemed to be growth drivers in the county and (iii.) those towns classified as ‘service towns’. Table 6.2: Population projections for (i.) Letterkenny, (ii.) County Growth Drivers and (iii.) Service Towns Settlement Population 2016 Population Target 2030 Letterkenny 19274 25434 (RSES target) Buncrana 6785 8342 Ballybofey-Stranorlar 4852 6409 Donegal Town 2618 4175 Killybegs 1236 1651 An Clochán Liath (Dungloe) 1164 1579 Lifford 1626 1959 Carndonagh 2471 2804 Ballyshannon 2299 2632 Bundoran 1963 2296 Raphoe 1089 1419 Bunbeg-Derrybeg 1491 1821 Milford 1037 1370 6.1.4 Household Formation The headship rate provides one measure of the rate of household formation. The headship rate is the proportion of individuals in an age cohort that list themselves as “head of household” or “principal reference person” in the Census or in the Quarterly National Household Survey (QNHS). Each household provides one reference person, thus an increase in the headship rate reveals an increase in the number of households. During the ‘Celtic Tiger’ years, headship rates had steadily increased across Ireland, with the biggest increases to be seen in the younger age groups. However, data from the 2011 and 2016 censuses show that headship rates in the State declined or otherwise remained static over this period, across all age cohorts. In Donegal, headship rates declined in the 25-39 age group in the period between 2011-2016, whilst headship rates increased in the 60+ age cohorts (see Table 6.3 below). The decline in the younger age cohorts can be partially explained by a decline in population in this group (population in the 25-39 age groups fell by 4217 persons, or 12%, between 2011-2016) but may also point to issues of housing supply. 5 Population projections based on housing targets set out in the core strategy and an envisaged occupancy of 2.75 persons per residential unit.
- County Donegal Development Plan 2024-2030 (As Varied) 60 Chapter 6 HousingChapter 6 Housing Table 6.3: Headship rates, State & Donegal 2011 & 2016 2011 2016 State Donegal State Donegal Under 25 years 0.04 0.02 0.02 0.01 25-29 years 0.35 0.34 0.30 0.27 30-34 years 0.47 0.46 0.43 0.42 35-39 years 0.51 0.51 0.49 0.49 40-44 years 0.53 0.53 0.53 0.53 45-49 years 0.54 0.54 0.54 0.54 50-54 years 0.56 0.55 0.56 0.55 55-59 years 0.57 0.57 0.57 0.57 60-64 years 0.58 0.56 0.58 0.60 Over 65 years 0.63 0.64 0.62 0.65 6.1.5 Income Analysis Median Gross Income Gross income is the income before tax is deducted, while the gross median income is the amount that divides a population into two equal groups, half having an income above that amount, and half having an income below that amount. The gross median household income for County Donegal in 2016 was €32,2596, lower than the State average of €45,256. In order to estimate current gross median household income, historic growth in the nominal median household disposable income at State level has been reviewed and it has been noted that on average, there has been a 3.2% annual change in the nominal median household disposable income for the State over the period 2016 to 2022 (see Table 6.4 below). Applying 3.2% annual growth, it is estimated that the gross median household income for County Donegal in 2022 was in the region of €38,967. Table 6.4: Median Household Disposable Income (State), 2016-2022 (Source: CSO) Year Nominal Median Household Disposable Income (State) % Change 2016 38,953 2017 39,499 1.4% 2018 42,865 8.5% 2019 43,552 1.6% 2020 43,915 0.8% 2021 46,471 5.8% 2022 46,999 1.1% Average % change year-on-year 3.2% Disposable Income Disposable income is the amount of income, after tax is deducted, that is available for spending and saving. It functions as an important measure of housing affordability in an area i.e. the ability of a household to purchase their own home. The CSO’s latest data relating to County Incomes and Regional GDP for 2020 outlines the average annual disposable income at State, Regional and County 6 Source: CSO, Geographical Profiles of Income in Ireland 2016
- County Donegal Development Plan 2024-2030 (As Varied) 61 Chapter 6 HousingChapter 6 Housing Levels. The average annual disposable income in County Donegal was €18,322; the lowest disposable income per person in the State at that time and 22% below the state average. 6.1.6 Residential Property Sales Residential Property Transactions 2022 Property price transaction data in County Donegal for 2022 (obtained from the Residential Property Price Register) has been chosen to reflect the current market context. Table 6.5 below provides details in relation to the price bands for residential property transactions in that year (for the purpose of this exercise, any properties that were sold for below market price have been omitted as they do not give a true representation of market prices). It is noted that 66% of total sales in 2022 related to properties costing €200,000 or less. Table 6.5: Property Price Bands in Co. Donegal, 2022 (Source: RPPI) Price Bands 2022 Number of Transactions % Total 0-100,000 399 26 100,001-150,000 310 20 150,001-200,000 317 20 200,001-250,000 226 14 250,001-300,000 135 9 300,001-350,000 63 4 350,001-400,000 41 3 400,001+ 70 4 Total 1561 100 Price Variability Figure 6.1 below shows the average sale price of residential properties across the three Eircode output areas within Donegal in December 2022, relative to the state and county averages. The Letterkenny Eircode area is the most expensive place to purchase in Donegal, with an average sale price of €201,739. The Lifford Eircode area is the least expensive, the average sale price of €169,258 being approximately 16% lower than the Letterkenny Area.
- County Donegal Development Plan 2024-2030 (As Varied) 62 Chapter 6 HousingChapter 6 Housing Figure 6.1: Average Sale Price by Eircode Output Area (Source: CSO) 6.1.7 Housing Affordability The Central Bank implements measures on mortgages to manage the amount that consumers can borrow to purchase a home. These measures are enforced via the loan-to-value (LTV) and loan-toincome (LTI) limits for mortgages. The LTV limit requires a customer to have a minimum deposit before they can get a mortgage. First-time buyers are allowed up to 90% LTV, meaning they must provide a minimum deposit of 10% upfront for any property. The LTI limit restricts the amount of money a customer can borrow to a maximum of 4 times gross income in the case of first-time buyers and 3.5 times gross income for second and subsequent buyers. The HNDA Tool analyses whether households could qualify for a mortgage that would enable them to purchase a house in the lowest price band under these rules7. The key variables used to determine whether households in a particular decile can qualify for a mortgage to purchase a house within a given year are: • Loan-to-Value (LTV) ratio of 0.90; • a maximum Loan-to-Income (LTI) ratio of 4/3.5; and • the upper value of the first house price band for that year. If a household does not have sufficient income to meet the Central Bank rules (i.e. 4/3.5 times their gross income being less than 90% of the purchase value of a house in the lowest projected price band for that year), they will not qualify for a mortgage that would enable them to purchase a home in their relevant area. The NWRA has undertaken analysis examining how affordable the average First Time Buyer (FTB) priced property would be for a couple earning the average FTB disposable income, for each year between 2016-2020. The data (see Fig. 6.2 below) shows that on average, a FTB couple in Co. Donegal, on average disposable income levels, would typically have paid between 17-21% of their joint monthly disposable income on their mortgage instalments on the average priced FTB property in the county, which is below the standard affordability mark of 30%. 7The Central Bank increased the LTI limit for 1st time buyers to 4 times gross income in late 2022; however, the HNDA Tool, which was developed earlier, is configured with the 3.5 gross income limit.
- County Donegal Development Plan 2024-2030 (As Varied) 63 Chapter 6 HousingChapter 6 Housing Figure 6.2: Mortgage repayments as % of monthly income in County Donegal, 2016-2022 (source: Regional Development Monitor) Since July of 2022, European Central Bank interest rates have increased significantly, and further increases are expected. These rate rises are being passed on to mortgage customers, thus potentially resulting in a decrease in home buying demand and consequentially, a potential fall in house pieces. 6.1.8 Rent Levels Average Rent Levels The RTB Rent Index is produced by the Residential Tenancies Board (RTB) and the Economic and Social Research Institute (ESRI) and provides rental indicators generated to track price developments in the Irish market. During Q2 of 2022, the Index indicates that the standardised average rent8 for new tenancies in County Donegal was €782.59 per month. Figure 6.3 details the average rental price increases in County Donegal from Q12016-Q2 2022 and shows a very significant 54% increase in the average rental price over this period, from €467 to €721. Figure 6.4 breaks down the average rental price by local areas. 8 Standardised average rent is a mix adjusted rent that takes account of the changing mix of properties in an area. 0 5 10 15 20 25 2016 2017 2018 2019 2020 Average Mortgage Repayment as % of monthly disposable income
- County Donegal Development Plan 2024-2030 (As Varied) 64 Chapter 6 HousingChapter 6 Housing Figure 6.3: Donegal Average Rental Price Time Series 2016-2022 (Source: CSO) Figure 6.4 - Average Rental Price by Local Area, Q2 2022 Rent Affordability The Northern and Western Regional Assembly have undertaken analysis9 to examine how affordable the average monthly rent would be for a couple earning the average county income for each year between 2016-2020, with this ratio expressed as a percentage (i.e. average monthly rent as a percentage of the average monthly disposable income of renters) – see Figure 6.5 below. 9 Source: Regional Development Monitor - https://rdm.geohive.ie
- County Donegal Development Plan 2024-2030 (As Varied) 65 Chapter 6 HousingChapter 6 Housing Table 6.6: Average Monthly Rent As A Percentage Of The Average Monthly Disposable Income Of Renters Year 2016 2017 2018 2019 2020 Rent as % of disposable income 24.6 23.9 26.1 24.7 23 The data indicates that rent levels are within, but close to, the standard affordability mark of 30% (i.e. a general rule of thumb that suggests housing costs should be below 30% of disposable income). 6.1.9 Local and National Economy National Outlook The European Commission’s ‘Economic Forecast for Ireland’10 notes that real GDP (Gross Domestic Product) grew by 2.3% quarter-on-quarter in the third quarter of 2022, which was much stronger than anticipated. Investment increased by 92% quarter-on-quarter, driven by multinational corporations’ investment. Exports of both goods and services kept on expanding robustly and private consumption grew despite downbeat consumer sentiment. The Economic Forecast refers to an improving outlook as we move forward, partly driven by an expected fall in inflation towards the end of the year. The Irish labour market continues to perform very well, with the unemployment rate at 4.3% in December 2022. Energy remains the main driver for inflation, although it has started moderating. By contrast, growth in food prices reached double digits in the final quarter of 2022. Inflation is expected to remain high in the early part of 2023 and to gradually subside thereafter, to 4.4% in 2023 as a whole and 2.1% in 2024. Ireland’s economic outlook remains subject to uncertainty due to trade developments related to the implementation of the Protocol on 10 Source: https://economy-finance.ec.europa.eu/economic-surveillance-eu-economies/ireland/economicforecast-ireland_en Figure 6.5: Rent as % of monthly disposable income (source: Regional Development Monitor) 21 22 23 24 25 26 27 2016 2017 2018 2019 2020 % Rent to Renters Income
- County Donegal Development Plan 2024-2030 (As Varied) 66 Chapter 6 HousingChapter 6 Housing Ireland/Northern Ireland. Furthermore, the performance of multinational corporations could swing growth in either direction. Local Circumstances Employment Rates County Donegal had the second highest unemployment rate in the State in 2016, standing at 18% (for comparison, Dún Laoghaire-Rathdown had the lowest rate at 7.4%). New Dwelling Completions in Donegal Figure 6.6 below provides details in relation to dwelling completions in County Donegal for the period 2018-2022. Single house completions remain the largest contributor to the overall numbers of housing units whilst apartment units number least amongst the overall completions data. Fig. 6.6: Residential unit completions 2018-2022 (source: Regional Development Monitor) Vacancy The preliminary results from Census 2022 indicate that County Donegal has a total housing stock of 86,489 units. Of these, 10,861 were stated to be vacant. The stated reasons for vacancy, as expressed though the census, are set out in Table 6.7 below. (NB – it should be noted that the CSO figures for vacancy differ markedly from those provided by Geodirectory in Q2 of 2022, which indicated a residential vacancy level of 5,608 units at that time. This disparity is understood to be due to the way in which vacancy is classified by the relevant agency11). Table 6.7: Reasons for Residential Vacancy (source: Census 2022 preliminary results) Reason for Vacancy Rental Property Renovation With Relatives Deceased Nursing Home/Hospital For Sale Farmhouse Emigrated New Build Other reason/Not Stated (%) 24 10.7 3.3 22 4.6 9 7 1.8 3.9 13.7 11 The NWRA’s ‘Regional Vacancy and Dereliction Analysis’ (2022) surmises, based on analysis from Geodirectory, that the census results include properties that would not be normally classified as vacant, but represent more of a transition or temporary vacancy rate, e.g. properties for sale or rent, properties where renovation work is underway etc. 433 430 577 479 670 0 100 200 300 400 500 600 700 800 2018 2019 2020 2021 2022 Residential Completions Single House Scheme House Apartment Total
- County Donegal Development Plan 2024-2030 (As Varied) 67 Chapter 6 HousingChapter 6 Housing Potential Housing Demand Arising from Ukraine War Latest figures from the CSO suggest that there are approximately 5,000 refugees currently living in Donegal. Many have been accommodated in tourist accommodation (hotels etc.) and there is some uncertainty around how long such arrangements may last as operators gear up for the tourist season. Allied to this is the uncertainty as to how many refugees may decide to stay long-term or permanently in Ireland, potentially resulting in the need for additional, well-located housing stock. 6.1.10 Key Issues Table 6.8: Key Areas that may impact HNDA Area of Interest Key Issues Identified Demographic issues for the local housing market 1. Need to consider impacts of immigration on housing demand, including impact of Ukraine war. Affordability issues for the local housing market 1. Housing supply needs to be maintained to avoid adverse impacts on affordability. 2. Low levels of disposable income relative to other parts of Ireland; may affect access to finance. Economic issues for the local housing market 1. Uncertainty in national economic outlook will have effects on local economic circumstances. 2. High unemployment levels need to be addressed to maintain a working age population in the county, which would in turn feed into the housing market. 3. Rising interest rates may affect consumer demand and may impact on house prices going forward. 6.1.11 Housing Stock Profile and Pressures This section addresses Section 2 of the HNDA analysis in line with the Guidance on the Preparation of a Housing Need and Demand Assessment’ (DHLGH, April 2021). Key outputs from this stage include: an analysis of the entire housing stock (owner occupied, private rented and all social) by, for example, size, condition, tenure and turnover; analysis of the Council’s own stock, the location of areas where there is undersupply or low demand; opportunities for more effective use of the housing stock.
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