Thursday, November 18th, 2010

This piece also in the Irish Times today:

“Emails, texts and phone calls kept coming all week as hordes of foreign journalists flew into our beleaguered country.  … [A]ll of them were hunting for ghost estates.  Images of empty Irish houses, the symbol pretty universally chosen to illustrate our plight, haunted TV screens and foreign newspapers.  But where to find them?  Bill Nowlan maintains that journalists will have a hard time tracking real ‘ghost estates’ down.  Says Nowlan  ‘It’s hard to find semi-derelict tumbleweed estates – because they’re largely a media fiction.”

As per the early post today, 1,475 estates out of the 2,846 unfinished estates identified by the DEHLG have uncompleted properties on them.  Admittedly they are not all semi-derelict tumbleweed estates, and many of them are nice estates, but one doesn’t have trouble finding unfinished estates that look worse for wear (especially on estates where there are high rates of under-construction properties).   Media fiction they are not, though the media does focus on the very worst of them (which I agree is not helpful or fully representative of the range of conditions of estates and this variation does need to enter into the discussion about them).  And as the earlier post notes, these estates have a range of real issues that need redress.  However, it is certainly not hard to find them – take a drive through any county in the country.

Unfinished estates are chosen as a symbol to highlight our plight because ultimately lending for property is at the root of the state we find ourselves in.  We take no pleasure in having to point out they exist, but pretending that they don’t or that only a handful have issues will not help address the problems residents or the property market faces.

If anyone else approaches the Irish Times and the IT doesn’t know where to point them – either direct them to the maps on the DEHLG website or refer them to, but don’t pretend the 2,846 unfinished estates don’t exist or that the problems relating to them are trivial.  Denial is not going to make the issue go away (ask Brian Lenihan about the banking and fiscal crisis).  Next we’ll be told we don’t have any zombie hotels, or empty retail parks, or vacant offices, etc.  They too are a mirage.

Rob Kitchin

Terminal 2 at night (Taken from Dublin Airport Authority website)

Dublin Airport’s Terminal 2 will open tomorrow, Friday, November 19th.  Its unveiling will act as the last major infrastructural project established during the boom years.  Undoubtedly, the Dublin Airport Authority, as well as the political advocates of the project never envisaged that the terminal would eventually open amidst decreasing passenger numbers at Dublin Airport brought about by a deep economic recession.  However, this is where the irony of Terminal 2 only begins.

The TV advertising campaign beginning the week prior to the terminal’s opening features actor David Murray making his way through the new terminal, musing on Ireland’s contribution to the world. This “small island in a big ocean” is responsible for the Beaufort scale, literary greats such as Yeats and Swift, and in the world of sport we have sent “champion horses” to all corners of the globe.  The inference in this being that when people come to Ireland full of expectations about this influential little country, Terminal 2 will be their first indication that yes, indeed, it is great.  A second inference is that when we send the best of what we have out to the world in the future, this ultra-modern facility will make that endeavour a more pleasant one.  It is the latter inference that hints at the second irony of Terminal 2.

Announcing the latest round of budgetary cuts and savings to be included in Budget 2011, the Irish government indicated that their expectation that 40,000 people will emigrate in that year was factored into their calculation.  In effect, for the government’s budgetary strategy for 2011 to be successful, they now need at least 40,000 to leave the country.  Previous posts to this blog by Rob Kitchin and Cian O’Callaghan point out that it is the young, highly educated cohort that are most likely to leave first.  So, heralded as a necessity brought about by a passenger boom which reflected the growing personal wealth of the Irish, and Ireland’s increasing popularity as a tourist destination, the reality of terminal 2’s early years at least, will be the manner in which it becomes the physical site where we export those highly educated, high skilled people who were produced by, and helped fuel the economic boom that brought that very site into existence.  How ironic.

Today, the day prior to the terminal’s official opening, representatives of the IMF, the ECB and the European Commission are in Dublin to discuss a financial ‘bail-out’ in the guise of a ‘substantial loan’ to the State.  Of course, it was the pursuance of imprudent policies within the banking sector and within the Department of Finance – partially manifested through the construction of many costly ‘monuments to prosperity’ such as the Dublin Port Tunnel, the IFSC, the Convention Centre Dublin, and of course Terminal 2 – that has ultimately resulted in that visit.  Wouldn’t it be ironic if these ‘bail-out chiefs’ were the first to pass through the airport terminal that owes much of its origins to the fiscal flippancy and short-sighted government expenditure programmes that made their visit necessary in the first place?

John Watters

Bill Nowlan has a piece in the Irish Times today arguing that the issue of unfinished estates is relatively trivial and we shouldn’t be too worried about them.  It is full of phrases such as ‘just 2,900 estates’ (as if 2,900 is not a lot); ‘the output [from the survey] is good’; they are ‘new estate developments’ rather than unfinished (despite the fact that 1475 estates have incomplete units, 71% of such estates being non-active, i.e. they are abandoned by the developer); ‘the number of part-built houses at 10,000 is insignificant, equating to about three months work in a normal property and construction environment’ (ignoring the other 10,000 under-construction and the fact there is nothing normal about the present market and won’t be for some time); ‘there are only 23,000 new houses built and unoccupied … this is just 2 per cent of the overall national stock of homes in the country’ (omitting the 10,000 nearly complete and the 10,000 under-construction); ‘we have a housing surplus [172,000] but only 8.2 per cent of that surplus is in new housing estates’ (again, ignoring the other 20,000 in production, but also ignoring the fact that the rest of that surplus is an issue).

Where we agree is that there is a lot of misinformation in the media about vacancy and unfinished estates, with the media conflating both oversupply and overall vacancy with unsold units.  We have posted on this several times – see our key housing statistics post.

Where we disagree is about shifting the focus from oversupply to overhang and the argument that we can basically stop worrying about unfinished estates beyond negative equity.  Overhang is unsold houses.  Oversupply is the number of units in excess of household demand taking into account holiday homes and an expected rate of vacancy.  The oversupply is estimated by DKM on behalf of the Dept of Environment to be between 122,029-147,032 (NIRSA and UCD have similar estimates).  In a weak market with high emigration, high unemployment, and poor access to mortgage credit, 44,030 units (23,250 complete, 9,976 nearly complete; 9,854 where construction has started) is an issue, and so is the distribution of properties.  And the gap between overhang and oversupply is also troubling (see our post here).  To try and focus exclusively on the overhang and ignore other facets of the overall housing stock in Ireland such as oversupply is to create a different type of misinformation.

And there are a number of issues on various estates as anyone who has visited a lot of them or lives on one will be able to testify.  For the people living on unfinished estates these issues are very real and they need to be addressed.  The issues concern health and safety, security, anti-social behaviour, building control, planning compliance, bonds and finance to complete, and negative equity.  The Department of Environment acknowledge these issues exist, which is why they have set up an expert group to try and find solutions.  There are 78,195 households living with some form of these problems, on estates where on average 35% of units are unoccupied or unfinished.  As noted above, 1475 estates have uncompleted units on them.  This is not trivial.

The survey was very useful and provides a pretty good picture of unfinished estates, but let’s not lose the run of ourselves and try and now spin the situation in order to convince ourselves that these estates are not a problem beyond negative equity, that the housing market is essential fine once we work off the overhang (as if that is going to happen any time soon), and that the present boom and bust was a ‘normal’ event (its scale and extent is far, far bigger than anything else in Irish history).  Any unoccupied house that has been built for a while needs maintenance, unfinished estates need completion, low occupancy estates need residents, the issues above need redress, and the issue of oversupply rather than overhang remains in play.  The unfinished estates data can be spun in many ways, but there are real issues here and they are not going to go away any time soon.

Rob Kitchin