The latest DEHLG housing survey has revealed that there are 2,846 estates where part of the development remains unfinished or vacant. These estates consist of 78,196 dwellings that are completed and occupied, 23,250 dwellings that are complete and vacant, 9,976 dwellings that are near complete, and a further 9,854 dwellings that are at various stages of construction activity.

The survey has also revealed that there are an additional number of dwellings that have received planning permission for development, but where no initial construction has yet begun.  The total number of planned and approved additional units is approximately 58,025.  Thankfully, these did not proceed to development or the extent of the housing crisis would have been worse.  According to the DEHLG these permissions do not pose any immediate construction or site specific difficulties as they are unlikely to proceed given the present market and access to credit.

The counties with the largest number of undeveloped planning permissions in existing unfinished estates are Fingal (9,502), Cork County (6,516), Meath (3,456), Dublin City (3,263) (Figure 1). It would be interesting to know how many of there are apartments, 3 bed semi-ds, etc.  Given their proximity to Dublin and Cork, it is likely that as estates are finished off and occupied over time, these permissions may be taken up, though developers might push strongly for a redesignation of the permission – say trying to move from high density apartments to lower density 3/4 bed semi-detached.  Such redesignation may well cause issues where estates are near to key infrastructure, such as the luas and rail lines, which were designed to increase density and the numbers within walking distance of stations.

If we normalise the permissions with respect to the number of existing households (units per 1000 households in 2006) we see a different picture emerge with Fingal, Laois, Longord and Cavan having the highest levels of excess permissions (Figure 2). Fingal presently has 2,866 units either completed but vacant, near complete, or underconstruction.  Between 1996-2006 the number of households in Fingal grew by, on average, 3,280 per annum.  If households were still growing at that rate, the unfinished estate units would last 10.5 months.  Of course, there is other vacant stock in the local authority, although it is relatively small, and the growth in households is not increasing at the same rate as 96-06.  Therefore the stock should last at least 12-24 months before present excess planning permissions will start to be taken up.  As for Laois, Longford and Cavan, given the present levels of oversupply it is highly unlikely that such permissions will be taken up any time soon.

Figure 1: Uncommenced Units

Figure 2: Uncommenced Units per 1000 households

Unfinished Estates: Breakdown by Units (percentage)

Unfinished Estates: Breakdown by Units (absolute figures)

 

Justin Gleeson

Unfinished Estates per 1000 Households

Number of inspected unfinished estates per county

 

The DEHLG have announced their unfinished estates survey in the last hour.  We’re presently looking over the data and preparing some maps which we’ll hopefully post later on.  In the meantime we thought it would be useful to detail some key statistics relating to the housing crisis in Ireland given that there has been much confusion to date with different data often being conflated.  In the absence of a census in the last year, all the figures, with the exception of the unfinished estates, are estimates using models.

1) Total housing stock – the total number of residential units in the country (which includes obsolete property, holiday homes and investment properties)

At end of 2009 – 1.96m units (DEHLG, estimate)

2) Total number of households – the total number of occupied units in the country

At end of 2009 – 1.63m (CSO, estimate)

3) Vacancy, including holiday homes – an estimate of the total number vacant units in the country, including holiday homes calculating using 2006 census data and projected household growth/new mortgage data

3 main estimates for up to 2009: DKM/DEHLG: 301,682-326,685;   NIRSA: 338,031;   UCD: 345,116

4) Vacancy, excluding holiday homes – an estimate of the total number of vacant units in the country, excluding holiday homes

3 main estimates for up to 2009: DKM/DEHLG: 228,206-253,209;   NIRSA: 252,029;   UCD: 280,596

5) Potential oversupply – the number of units above an expected base vacancy rate (a certain proportion of housing stock will always be empty in any housing market); the number of units in excess of this base vacancy rate are considered to be an oversupply in the present market

3 main estimates for up to 2009: DKM/DEHLG 122,029-147,032 (using a 6% base rate); NIRSA 120,248 (using a 6% base rate); UCD: 171,178 (using a 5% base rate)

6) Unsold houses – total number of unsold, brand new units in the country (this along with secondhand houses – c.50,000 – constitute the present the housing market)

2 main estimates: Construction Industry Federation (Nov 2009) 35,000 to 40,000; DEHLG: 33,226 (23,250 complete, 9,976 nearly complete; +9,854 where construction has started)

7) Unfinished estates – the number of unfinished estates in the country, where an unfinished estate is defined as an estate that has 2 or more houses where development and services have not been completed and estates completed from 2007 onwards where 10% or more of units are vacant

Number of estates as of mid-2010: 2,846 (DEHLG); 429 active

Number of units in these estates: 121,248

Number occupied: 78,195

Planning permission for an additional: 58,025

8 ) Ghost estates – a particular class of unfinished estate consisting of 10 or more units, where 50% or more of units are vacant or under-construction, built from 2005 onwards

Number of estates at end of 2009: 620 (NIRSA etimate)

Number of units in these estates at the end of 2009: 19,262 units (including 11,670 vacant; 3,823 under-construction)

Rob Kitchin and Justin Gleeson

Gary, Indiana in the USA has a population around 100,000 and practically no jobs or services. It is the recipient of Obama’s stimulus package to resuscitate the economy. A report on BBC 2 last night looked at the city to examine the impacts of recent economic policy in the US. Watch an excerpt and read more here.

Gary is one third poor, 84% African American, and has seen its population halve over the past three decades. If crime, as the official figures suggest, has recently dropped off then – say the critics – that is because population flight from the city is bigger than the census figures show.

In Ireland, we don’t have ghost towns like Gary yet. If we get out-migration then we might do in a few places as oversupply decay and other buildings are vacated as people leave. However the size of the country will probably mitigate the stark neglect experienced in many areas of the US (the Ozark Mountain region depicted in Debra Granik’s recently released film Winter’s Bone offers another example). Nevertheless, Gary is a bleak vision of uneven development under capitalism.

Cian O’ Callaghan

Just catching up on the day’s papers when I came across this in the Irish Times.

Houses on ghost estates could be given to Irish emigrants seeking to return to their home counties or even to religious fundamentalists, Labour TD and presidential aspirant Michael D Higgins has proposed. … Some years ago, we discovered the diaspora. Some of our emigrants living in England, for example, are retired and can’t afford to come back. We should give them all these empty houses and let them look after them for three or four months at a time.

Okay, so I didn’t hear the whole talk, but this seems worthy of a bit of scrutiny.

Who from the diaspora gets to live in these houses?  What’s the selection criteria?  Is it only those that can’t afford to fund their own trips back?  Will they have support services when they’re here?  What about transport, etc?  Difficult to live in  many rural estates without private transport as there’s no or limited public transport.  Is this purely an altrustic move or is it designed to help the local economy/community?  If this is simply to provide a base whilst the diaspora spend a short time in Ireland, surely we’d be better off giving very low rates for hotels and self-catering cottages (which are also struggling) where there would at least be some services, etc. and it would support local businesses?  I appreciate all the arguments about the need to give something back to the diaspora who supported the country during the 1950s and 1980s, in particular, and I’d support initiatives such as the Aisling Project, but this needs a bit of thought.

What would be the logic in giving houses to religious fundamentalists?  Is that what Ireland needs – religious fundamentalism?

Beyond an extension to initiatives such as Aisling Project, why would we give houses to the diaspora or religious fundamentalists when there are local people who need houses?  Or perhaps local people who might like to trade-up or swap their house for one of these.  I’ve been to a lot of ghost estates and many of them are pretty nice, with fine houses.  The problem isn’t the houses or estate, it’s the market.  As a recent firesale in Drumshanbo has shown, if you reduce the price sufficiently, houses do sell.  Why give away when there is a market?  In the Drumshanbo case a local market, not simply investor-led.

I can’t help wondering if the only way giving houses away is going to help local housing markets, and those in negative equity, is by getting some houses off the market and thus squeezing supply?

There are many questions surrounding ghost estates.  I’m just not sure how giving houses away, in whatever form, helps address many of them in a constructive and productive way.  And if I’d bought and lived on one of these estates (and there are only a handful that are completely empty) then I’d be pretty cheesed off if the remaining properties were given away.  If the properties are going to be short term lets to the diaspora, I’d also be sceptical about how this is going to help build a long-term community.

There seems to be a lot of throw-away comments concerning what to do with ghost estates, some of which do not seem to be thought all the way through and do little to advance the debate or help the people living on them.  The starting point for what to do with ghost estates has to start with their existing residents, the local economy, and the local housing market (including issues of housing need, social housing and affordability).  Once all avenues around those have been explored and exhausted we can consider giving them away or finding alternative uses.

In the same article: ‘Dublin City Council’s chief planning officer, Dick Gleeson, complained that “the people who say ‘no’ have had too much influence” in blocking progress, and he emphasised that sustainability “rooted in good governance” was at the heart of the new city plan.’

I’ll admit that the planning process can be used to slow down or block development, sometimes excessively so, but the presumption for development at seemingly any cost over the boom years would seem to suggest the opposite – people who say ‘no’ had little or not enough influence.  In fact, a big part of the bust is the fact that those that said ‘no’ were sidelined and their warnings not heeded.  I’m not going to argue about good governance.  We need good governance and good government.  In spade fulls.

Rob Kitchin

Google released Street View Ireland last week (go to Google Maps – maps.google.ie – zoom in on Ireland and drag the yellow man in the top left onto the map).  One of the side effects is that they have captured the full extent of the housing bust as their cars drove round every road in the country in spring 2009 (see here for examples).  Having looked at the startling Google Earth images at this blog of the housing bust in the US, I thought I’d capture a few Google Earth images of unfinished estates in Ireland.  It’s actually very easy to spot under-construction estates in the areas of the country with high resolution imagery – simply zoom into a town and they stand out.  Given that the imagery used in Google Earth can be a little dated (average three years old) some of these estates will now be completed, but many of them remain in a still under-construction state and have been joined by others.  Here are eight of them.

Rob Kitchin

A new initiative has been set up by the Department of the Environment to document the condition of all housing estates across the country. This inventory was due to include details on the overall number of housing developments, completed and occupied developments, units ready for sale, units near completion, units at specific earlier stages of construction, and units not started at all. A pilot survey has just been completed in County Laois and Minister of States for Planning Ciaran Cuff is expecting national results on a county by county basis in September.

The results from the Laois pilot survey suggested that in addition to the financial consequences of high level of excess housing vacancy there were also visual, environmental and pressing health implications (IT 09/08/10).

The Laois pilot survey found:

  • Serious public health and safety issues at one-quarter of the surveyed sites such as open sewers and manholes, water contamination and unsecured building sites
  • One-third of recently completed housing developments are currently vacant
  • A fifth of completed units are without adequate water, sewage or road access
  • Alarmingly the survey also found that an additional 40% of planning permissions granted in Laois has not even got to the construction phase as yet (Independent.ie 09/08/10)

Another worrying aspect of the planning process has also been revealed through the survey. It now seems that developer’s insurance bonds, if paid to the Local Authority at all, were in no way adequate or sufficient and in lots of cases will not meet the needs of the clean-up operation. According to a senior Government official, developer’s and speculators were able to ignore preconditions and press ahead with their plans.

“Even in some cases where there were conditions to pay bonds; a lot of them just went ahead and started developing without discharging any of the pre-commencement conditions”

There is no doubt that the findings from the complete national survey will provide some startling figures. We need this and it will hopefully provide a strong evidence based platform from where a recovery strategy can be planned.

Justin Gleeson

NIRSA Op Ed in Sunday Business Post

Housing in Ireland is in crisis.  House prices have fallen on average 35%.  Development land has plummeted in value by 75-90%.  Farmland is down 50% or more.  A quarter of a million households are in negative equity and over 32,000 households are more than 90 days in mortgage arrears.  Housing oversupply is in excess of 120,000 units and there are 620 ghost estates where over half the properties are empty or under-construction.  The National Assets Management Agency (NAMA) has been created to supposedly save the banks and Irish taxpayers by transferring €88 billion worth of ‘toxic’ and poorly performing property assets and rolled-up interest to the state.

These disastrous facts demand two questions.  What went wrong?  What needs to change to make sure it never happens again?

In our report, A Haunted Landscape, we deal extensively with the former.  Our principal argument is that both levers used to control development – fiscal and planning policy – failed.  Banks were poorly regulated and lent too much money, and tax incentives fuelled the boom.  Planning did not act as the counter-balance to the excesses of the building frenzy, zoning too much land and giving out too many planning permissions.  The result was oversupply of houses across the whole country, with some counties particularly badly hit.

What needs to done?  First, we urgently need an independent inquiry that provides a systemic review of the planning system.  This does not need to be a tribunal-style blame game that will last for years.  Rather it should take the form of the recent Honohan, and Regling & Watson reports on banking and financial regulation that were completed in a matter of months. The final report would provide a synoptic overview of the entire system of planning and development, focusing on how planning policy is produced and implemented, and the organisation, operation and regulation of planning within Ireland.

The government has said that such an inquiry is not needed because it is already undertaking reviews of planning decisions in six local authorities and that the new Planning and Development (Amendment) Act addresses the major problems that led to poor planning decisions.  These reviews are focused on specific cases and are not designed to provide a broad analysis of how the entire system worked, or failed to work.  And whilst we welcome the new Act it should be seen as the first step to reform, but it should not be the only step.  An inquiry would provide strong evidence for the next steps.

On a practical note we need to get to grips with ghost estates.  There are thousands of families who are living with the stress of negative equity and few neighbours, in many cases in estates that are unfinished and abandoned.  Estates may be lacking in basic infrastructure and public facilities and amenities, and residents may have to negotiate serious issues of health and safety.

We need an action plan to address the hardships of those people trapped on such estates – to finish out the development, demolishing units if needed.  At the moment, residents are unsure who to turn to for help – developers, banks, local authorities, government departments or NAMA – and nobody seems prepared to take responsibility.  Our view would be that local authorities be given the task, along with sufficient resources to do so.

We also need a plan to cover the maintenance of properties while they lie idle.  Once damp and cold enter a house the infrastructure starts to decay and very soon it becomes unliveable.  Failing to look after stock will mean the loss of perfectly good houses that might be needed in the future.

The government has established the Social Housing Leasing Initiative, which will use some ghost estates for social housing.  However, we need to consider alternative uses for other estates.  Those in remote rural locations are simply not suitable for social housing given the lack of public transport, social amenities or access to employment, but perhaps they might be useful for small businesses or cultural activities.

There are a number of specific issues that should be addressed in the short term with regards to the planning system.  Planning permissions and regulations need to be rigorously overseen and enforced.  The evidence base used in the planning system needs to be radically improved.  There needs to be a proper house price register and all housing data to be generated and released at a local level.

The process of land zoning should be evidence-based and zonings time delimited.  Housing and patterns of development should be based on local need, not greed, and guided by the National Spatial Strategy and not localism and zero-sum comparisons.  Future tax incentive schemes should be evidence-informed, fully debated and have set targets.  They should have defined end goals and points, and annual evaluations.  All those involved in the planning process should receive mandatory training in planning issues and policy, and the principles of local and regional development.

There should be a commitment that all future local planning be community and plan-led, not developer and speculator-led.

With respect to NAMA, the public need to be reassured that the agency will succeed in its aims.  NAMA is soon to be the largest controller of property in the state.  It is purchasing assets, supposedly on behalf of tax payers, yet there is a worrying lack of transparency about the organization.

We would be concerned as to whether NAMA can succeed given the sums being paid by the state to the banks for their assets, and the make-up and geography of the portfolio.  Irish developers and speculators seemingly forgot the well worn mantra of ‘location, location, location’, and much of the land and property heading into NAMA is in marginal locations with weak and falling demand.

Unless valuations are taking into account existing levels of oversupply and evidence-informed, long-term projections of an area’s demography and labour market then NAMA is potentially overpaying for assets.  Further, if land is purchased by the state on the basis of existing zoning then any future dezoning, as proposed by government, will deflate its value and lead to a loss on the investment.

Ultimately, to recover the state investment, NAMA requires the property market to be re-inflated back to higher levels, which have already proved unsustainable.  The uncertainties concerning NAMA will only be dispelled through full transparency in the agency’s workings and the assets it is managing.

As a nation we need to learn the lessons of the Celtic Tiger years.  We have to go back and review what went wrong, fix the system that created the mess we are in, and make sure that it does not happen again.  NAMA and the Planning and Development (Amendment) Act are not the only answers.  And we have to make sure they do not make the situation worse.

We are three years into the housing slump and yet we still haven’t got to grips with addressing the various problems we face.  We need a plan of action and we need to implement this plan.  And we need to do it sooner rather than later.

Rob Kitchin

An interesting article in today’s Examiner looking at the issue of unfinished estates, developers and bonds, and the plight of those seeking to get estates completed to an acceptable standard.  See here.  The Examiner received information from 28 county councils concerning the taking-in of estates by local authorities, wherein they take over the control and maintenance of ‘public roads and footpaths, public lighting, fire hydrants, water mains, treatment plants, public open spaces and playgrounds.’  There is little point re-iterating the article, which does a good job of explaining the main issues.  The following, however, caught our eye: ‘Co Roscommon puts at 86 its number of unfinished estates. Cavan has 55.’   (more…)