Tuesday, 28 October 2008

50,000 new homes lying empty in 'ghost' estates

AT LEAST 50,000 newly-built homes are lying empty in 'ghost' estates across the country because of the economic downturn.

Hard-pressed developers and estate agents are being forced to drop their asking prices by as much as 50pc in a desperate effort to shift unwanted homes dotted across the country.

An Irish Independent investigation has also found that hundreds of housing estates which should have been completed at least two years ago are still unfinished.

Figures from local authorities show that county councils will not take responsibility for maintaining roads and open spaces in at least 300 estates because they have not been finished to the standard required by the planning permission.

The glut of empty homes -- many built under tax break schemes -- shows the pressures now being faced by homebuilders in the economic downturn.


House completions are at their lowest level in years and builders are putting off starting new homes until the market improves.

Thousands of potential homebuyers have also been refused access to credit, with many others deciding not to buy in the hope that prices will fall further.

The Irish Independent has found:

l The situation is worst in the midlands, border counties and the west of Ireland. Many properties are in areas marketed as being close to Dublin and other major cities, but in fact are in rural areas.

l There is up to 12 months' supply of homes currently empty -- twice what would be expected in a 'normal' market.

l Rural villages, such as Rathcormac in Co Cork, are swamped with unsold real estate.

l One developer has slashed asking prices by 50pc in an effort to sell properties.

Earlier this month, a report by Goodbody Economic Consultations found that 50,000 units had been built but not sold. It estimated there was 19 months of supply of second-hand homes for sale in Ireland. It concluded there could be a vacant stock of homes in the country in the order of 100,000 units.

While estate agents say that the market favours buyers, the Construction Industry Federation has warned that further prices cuts were unlikely.

"Prices have reduced by 30pc, and there isn't much scope for more cuts. A lot depends on the return to normal financial arrangements," a spokesman said.

Friends of the Irish Environment director Tony Lowes said the glut of new homes had "virtually emptied" some rural villages. "This has produced a very strong social impact because people living in these villages find they have no neighbours any more," he said.

The situation was criticised by the Labour Party, which said the pace of development in rural areas was "never sustainable".

"These estates were built by developers who clearly set out to make a profit and the position has changed. There should be no intervention in the housing market in what we would see as a normalisation process," the party's housing spokesman Ciaran Lynch said yesterday.

"This is developer-led, it was never sustainable. There's a difference between building housing estates and building communities."

Meanwhile, new figures show thousands of people have shown interest in securing a Government-backed mortgage which allows people on salaries of at least €40,000 to borrow up to €285,000 -- a maximum of 92pc of the value of the property -- from local authorities.

In one week, 4,500 people visited the Homechoice Loan website, with 583 registering an interest in availing of the scheme.

Paul Melia, Stephen O'Farrell and Caitrina Cody
Irish Independent


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