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