The CIF are at it again.  Apparently we need to start building houses again, as reported in the Sunday Indo.  As usual, they use a selective choice of data to make their case, principally focusing on the supply side of things and ignoring the already existing oversupply and weak demand.  Here is the glaring hole in their analysis.

The Census 2011 reports that there are 230,056 vacant units in the country (excluding holiday homes), of which 110K constitute oversupply on a base 6% vacancy rate.  36,000 of those are either brand new vacant or underconstruction units in unfinished estates.  There are dozens of these estates in the Greater Dublin region and a lot of stock for sale/rent.  Only South Dublin has a vacancy rate below 6 percent.  According to the CSO, population growth in 2010 was 11,400, in 2011 it was 13,600.  This was population not households.  There was net out-migration of 34K in 2010 and 2011, principally of people aged 20-40 (household formation age), the big growth in population between 2006-2011 was children under the age of 5 (they aren’t buying anything soon).  Where is the figure of 25K demand coming from?

There is a reason why only 8,000 units will be built this year – we don’t need any more.  Between 1991 and 2011 there was 933K housing units built in Ireland, households went up by 625K, in other words we built 1.5 units for every one household.  We need to work off this oversupply before we start building again. If supply and demand were in-line we would not have had a drop of 50% (so far) in house prices.  We do need construction – green energy, ICT infrastructure, public utilities, public transport – stuff that will serves domestic and FDI companies and the general public, but not housing (we also don’t need offices or retail space – over 20% of office space in Dublin is vacant).  Even if the units are built where is the mortgage credit coming from for buyers?

The CIF is a lobby group for house builders.  No great surprise they want to build – they need the money to pay back NAMA/foreign banks on the other houses they built in-excess of demand.  If they got their way and built more units then all they’d succeed in doing is continue to flatline the market by adding supply to oversupply.  Of course nothing is stopping them from building other than finance and if they really believed their own mantra then there are thousands of sites with planning permission already granted and they can get on with it.  The reality is that 1,822 unfinished estates have outstanding building work around the country where the developer is inactive due to lack of finance.  Why would developers get finance for new developments when they can’t even finish off existing jobs (and who in their right mind is going to lend for construction given the data above)?  Their plea suggests they want the government to do something – like commission house building or provide tax incentives.  Hopefully their call will fall on deaf ears.  We’re already paying the price for a spectacular property crash.  We don’t need that situation made any worse.

Rob Kitchin

Census 2011 revealed that there were 289,451 vacant properties (14.5% of total stock) in April 2011.  Of these 59,395 (3%) were classed as holiday homes.  That means that 230,056 properties are vacant.  In any housing market there are always some houses vacant, termed base vacancy.  In Ireland the Dept of Environment (DECLG) expect 6% of properties to be vacant at any one time.  In other words, given the 1.99m units they’d expect 119,691 units to be vacant.  That still leaves us with an oversupply of 110,365 units (plus 17,900 under-construction units as recorded by the DECLG unfinished housing development survey for 2011). (more…)

Following on from our Census mapping work from last week, we thought it would be interesting to overlay the 2,876 unfinished estates identified by the Dept of Environment through their housing development survey over the vacancy rates at Small Area level calculated from Census 2011.  (more…)

Newstalk Radio broadcast a documentary ‘Deserted Village’ this morning at the convenient time of 7am (thankfully available as a podcast and repeated tomorrow at 9am).  Made by Jane Ruffino it examines the bubble and bust in Leitrim, in particular looking at property development in the county.  The focus is on two villages – Keshcarrigan and Newtowngore – and the town of Ballinamore.

Rather than examine the unfinished estate and empty one-off phenomena from a macro, abstract scale, the documentary provides a human face consisting of a number of frank and open conversations with residents, farmers, builders and developers.  What becomes apparent is that there were ‘no heroes, no villains, no happily-ever-afters’ and that everybody ultimately lost in the property frenzy – but that people are getting on with their lives and whilst resentful of the haunted landscape of excess property still love the place they call home.

Well worth a listen.

Rob Kitchin

P.S. the guerilla gardening piece we blogged about on Tuesday took place in Keshcarrigan.

A new group called ‘Nama to Nature‘ has started an innovative bit of civil disobedience, planting trees on unfinished estates to help speed up the process of entropy and revert the spaces back to nature.  TheJournal.ie details the groups activities in one estate in Keshcarrigan, County Leitrim.

We left early in the morning, some of us rowing across a lake in the haze of daybreak with bags of compost, spades and saplings. By 8am we were down to work, managing to find sufficient exposed soil to plant 500 alder, 100 silver birch, 100 hazel, 100 ash and 200 willow. What we did was a largely symbolic gesture, tonnes of rubble still need to be removed and the plastics need to be disposed of as a matter of urgency or they could pollute the adjoining lake.”

Such kinds of activism are called ‘guerilla gardening’ and there are such groups all round the world.  guerillagardening.org gives a good intro  including details on guerilla gardening in Ireland, also see the Wikipedia page that has a load of links.

The basic premise is to reclaim public space for the public by planting seeds and plants and to encourage community participation in the environments in which we live. The rather grey area with respect to unfinished estates is the extent to which they are public spaces given that the unfinished elements of such estates remain legally in private hands, and indeed the lived in parts do to until they are taken in charge by local authorities.

Nevertheless, the point of civil disobedience is to challenge such notions of what constitutes public/private space and to actively intervene to positive effect.  Nama to Nature, and guerilla gardening in general, does both.  Through direct intervention it actively shows what alternative futures some of these abandoned developments – especially the ones that are not commercial viable now or in the short to medium term – could have.  And moreover, it starts to make such futures possible through planting.  It’ll be interesting to see if the movement catches on and how these new gardens and forests fare in the coming years.

Rob Kitchin

Yesterday bought the tragic news that a two year old boy had died on an unfinished estate near to Athlone.  He had followed his pet dog in through a gap in the fence and drowned in a pool of water.  His family have my deepest sympathy and condolences.

The death is likely to focus attention back onto unfinished estates and what is happening with respect to them.  Minister Hogan has already asked Westmeath County Council for a report on the estate in question.  Our working paper, which sets out the issue in detail can be found here.

Unfinished estates have been posing problems since the start of the crash and building work largely stopped on developments.  The Department of Environment survey in 2011 revealed there were 2,876 unfinished estates in the county.  2,066 have outstanding development work.  1,822 of these have no development activity occurring.

Problems facing estates include incomplete development work, security, health and safety, antisocial behaviour, lack of finance to address issues, lack of sense of place/community, planning and building reg compliance, and negative equity.

We are five years in since the start of the crash and two years on since the announcement by Minister Finneran of the setting up of the unfinished estates advisory board by the Dept of Environment.  That Board only reported in June 2011, with Minister Penrose setting out how the government would tackle what was supposedly an urgent issue.  The Manual followed a few months later.

The solution was: (a) a 5 million fund to tackle health and safety issues on the worst of the estates; (b) Site Resolution Plans (SRPs).  SRPs are stakeholder groups that plan how to tackle issues on an estate by estate basis (stakeholders would be Local Authorities, developers, banks, residents, estate management companies, etc).

The fund is not adequate to address the issues facing estates and is principally aimed at tackling significant health and safety concerns in a low cost way (filling in, fencing off, pulling down unsafe structures, etc).  Here, it must be acknowledged that many of the worst estates have been fenced off (as was the case in Athlone), though often vandalism has opened up gaps and on-going repairs are not necessarily as timely as they should be.  Nevertheless, €5m is a paltry sum and for that kind of minimal investment one would have thought that high priority health and safety issues would have been addressed already.

SRPs are non-mandatory and voluntaristic, time frames are suggestive, there are no conflict resolution mechanisms, local authorities are being given no additional resources to manage the process, and the issue of lack of finance and insolvency is ignored.  SRPs are likely to be slow and haphazard. The aim is to have 300 SRPs in place by the end of 2012, which hardly suggests a speedy response given the number of estates with outstanding development work (a handful per local authority).

Basically, there has been an inadequate response to the issue.  The fund is too small and SRPs are a limited effort, minimal cost approach to unfinished estates that tries to use existing legislation to resolve issues (but largely avoids court cases).  It gives the impression of policy-at-work, but to a large degree pushes the problem down the road to be corrected at a later date by the market.  In the meantime, estates wither on the vine and residents live with the consequences of worst features of the housing bust.

We are long past the point of needing a proper policy to deal with the issue of unfinished estates, one that is backed by finance and stronger powers to local authorities to compel developers/banks to complete works.  A one-off report concerning the estate in question might suggest that action is being taken, but it simply delays further any real change to how unfinished estates are being addressed by the state.

This is an issue that has been for too long kicked down the road; it’s time for a more proactive, muscular strategy.  €5m is 0.16% of the €3bn we’re about to pay back in Anglo promissory notes.  It’s a paltry sum in the grand scheme of things and the people living on them or near them deserve better.

Rob Kitchin

Below is a map of the activity status of unfinished estates across the country.

701 estates are classified as being complete in terms of building work, though they have issues of vacancy

109 estates have not been started

245 estates are active (429 in 2010)

1822 estates are inactive and have outstanding building works

It’s a little difficult to see some of the dots because there are so many estates in certain parts of the country that they overlap on the map (see AIRO to look at on an estate by estate basis), however it’s clear that there is no real pattern to the data.  All the counties have a mix of complete, active and non-active sites, though the unstarted developments are clustered around Dublin and Cork.  The most worrying issue is the sheer number of inactive estates.  Until these become active then the building work required will persist for quite some time, meaning that they will remain a feature of the landscape and that residents will continue to deal with the outstanding issues.Rob Kitchin and Eoghan McCarthy

We’ve been working on the 2011 unfinished estates database released by the DECLG last week and computing the changes on an estate by estate basis between 2010-2011.  We have upload all the 2011 data and the 2010-2011 change data onto the AIRO website, enabling users to query all the results for every estate.  To use the site you will need to register.  Once registered, click on the mapping module tab, scroll down and click on ‘+ housing’, then scroll down and select ‘Unfinished estates’.  The module will then load.  To query the estate data click on ‘indicators’ button and select what data you are interested in.

We will exam the data in more detail over the next couple of weeks. Initial examination of the complete and occupancy data reveals that between Oct 2010-Oct 2011:

105 (3.6%) estates had a fall in the level of occupancy

1536 (54%) estates had no change in the level of occupancy

2109 (74%) estates had a change of 2 or less in the level of occupancy

2396 (84%) estates had a change of 5 or less in the level of occupancy

In other words, the vast majority of estates that were in the 2010 database experienced very little change in the level of occupancy between 2010 and 2011.  In fact, the 100 estates (3.5%) with the most positive change in occupancy accounted for 60.7% of all newly occupied units.  The change in occupancy then was highly concentrated into a relatively small number of estates.  These estates have a geographic pattern.  Of the estates that experienced occupancy growth of 40 or more (31 estates), 23 were in Dublin, 3 in Cork, and one each in Waterford, Mullingar, Mallow, Lucan and Ratoath.  That is, they are concentrated in the cities and large towns and their commuter belts.  Huge swathes of the country saw very little uptake of occupancy in their unfinished estates.

Rob Kitchin

The Minister for Housing and Planning, Willie Penrose T.D., has issued a press release and short report on the 2011 unfinished housing estate survey 2011.  The data updates the survey undertaken in 2010.

The headline figures

* 2,876 housing developments of two or more housing units were inspected by the Department in the 2011 survey

* 701 developments have no outstanding building work, though they have issues of vacancy, and 109 developments have not substantially commenced.  There are thus 2,066 unfinished housing developments that still require building work.

* 18,638 dwellings were recorded as complete and vacant, a 4,612 (20%) reduction from the 23,250 recorded in 2010.

* 17,872 dwellings are at various further stages of construction – 8,794 are nearly complete (9,976 in 2010) and 9,078 are underconstruction (9,854 in 2010), a reduction of 1,958 from 2010 (9.9%)

* In terms of activity levels, 1,822 of the 2,066 unfinished sites were mainly inactive at the time of inspection with 245 active (in 2010 429 sites were active, a reduction of 43%)

* Of the 247 estates categorised as the most problematic from a public safety perspective (Category 4), 36 have been re-categorised to the less problematic Category 3.

The good news

* There has been a reduction in:  (1) the number of vacant and unfinished properties – (43,080 to 36,510; 15.25%); (2) 701 estates have no outstanding building work though they have issues of vacancy, and 109 have not commenced.

* There have been some improvements in health and safety and infrastructure (fencing, sewage, roads, paths, lighting etc), though these are not quantified in the report.

In other words, some progress has been made on the ground.

The bad news

* At the present rate of correction in terms of occupancy (6,570 per annum) it will take 5 years for the remaining 36,510 units be occupied.

* There are still significant health and safety issues, only 36 of the 247 worst estates were downgraded.  This is a reflection of the lack of access to development funds and the short period of time the local authority fund has been available to redress these issues.

* There is a marginal reduction in the number of incomplete properties (19,830 to 17,872; 9.9%) and there has been a fall in the number of active sites (43%).  In other words, development work is slow to inactive.

What the data highlights is that the housing market is still very weak (and much of the fall in vacancy will be accounted for in rentals) and that funding for development work and for mortgages is very difficult to access.  It also suggests that rhetoric about there only being 12 months or less supply in many counties (as stated by the CIF) or that we need to build 30,000 units per year for the next 15 years needs to be treated with caution, at least in the short to mid term.  Over the long term, we will need additional social and private housing, but we don’t need to start building it right now until the present level of oversupply is worked off and development and mortgage credit become available.  And there is significantly more oversupply in the country than brand new, unfinished developments.  The Census 2011 revealed that there are 294,020 vacant units in the country, probably about 80-100,000 units are oversupply (on a 6% base rate) consisting of unfinished units, vacant one-off houses, empty investment and secondhand property.

We will be working with the updated spreadsheet over the next couple of days to get a fuller picture of the changes and we will load all of the data up into the AIRO website so that estate by estate, and county by county, comparisons can be made between 2010 and 2011.

Rob Kitchin

Willie Penrose T.D., Minister for Planning and Housing, published two documents through the Department of Environment, Community and Local Government today relating to unfinished estates.

The first is ‘Resolving Ireland’s Unfinished Housing Developments: Report of the Advisory Group on Unfinished Housing Developments‘, which sets out the various issues relating to unfinished estates and makes various recommendations with respect to addressing these issues.  It extends the Advisory Board’s draft report published back in February.

The second is the Department’s response: ‘Resolving Unfinished Housing Developments: Response to the Advisory Group on Unfinished Housing Developments‘.  This sets out four strategic aims for the next twelve months (developing a coordinated partnership approach to unfinished estates; tackling issues of public safety; putting in place stronger legislation/policy frameworks to tackle issues; building confidence in the housing market) and a number of action points for the Department and related agencies.

There are two other associated documents that have yet to be published – the manual on how to tackle in practical terms the issues related to unfinished estates (which will be an updated version of the draft manual published in Dec 2010) and the code of practice.  These are due shortly and will give more specific information for developers, local authorities and other stakeholders.

The Department’s response piece is, in my view, the more important document because it commits the DECLG to 20 actions set out in relation to five themes.  The most important of these are the development of Site Resolution Plans (SRPs) that will involve a partnership approach to estate completion, whereby all stakeholders (developers, banks, local authorities, residents, estate management companies, Health and Safety Authority, etc) will meet to negotiate a plan of action on an estate by estate basis.  The action points in summary are:

Coordination and Partnership

1.    A National Co-ordination Team on Unfinished Housing Developments, under the chair of the Minister, will drive the implementation process, with a particular focus on resolving sites.

2.    City and County Councils will each establish Unfinished Housing Development Teams to co-ordinate actions at a local level and to provide regular reports to the National Co-ordination Team.

3.    A Code of Practice on issues such as public safety, the site resolution plan process, information exchange and identification of development solutions will be finalised by the National Co-ordination Team to ensure buy-in by developers, site owners, funders, local authorities and residents.

4.    In cases where the relevant loans / securities fall within their remit, NAMA will work with local authorities, developers and/or receivers and the Department in facilitating early resolution of public safety issues and in co-operating with the other stakeholders in agreeing and implementing Site Resolution Plans, where feasible and appropriate.

5.    The Minister will engage with other financial institutions (both domestic and non-domestic banks) to ensure a full understanding of their statutory responsibilities and to secure their co-operation and engagement with local authorities and developers in addressing public safety issues and in agreeing and implementing Site Resolution Plans.

6.    An Information Pack for local residents in unfinished housing developments will be prepared and published by the Housing and Sustainable Communities Agency.

7.    Guidance will be issued to City and County Development Boards on encouraging and facilitating community involvement in resolving unfinished housing developments.

8.    A best practice Guidance Manual on Managing and Resolving Unfinished Housing Developments on unfinished housing developments will provide practical guidance for local authorities and other stakeholders on how to manage unfinished housing developments

Public Safety

9.    Local authorities will complete their own initial categorisation of unfinished housing sites in line with the four categories identified in the Advisory Group’s Report and will monitor the developments in their areas, updating regularly the National Co-ordination Team on the status of housing developments in their area.

10.    The Department will expedite the approval of applications for funding support from the €5 million public safety initiative funding with the first allocations to be made in June 2011.

11.    Local authorities and the Health and Safety Authority will continue to liaise and engage in monitoring incomplete sites and any resolution activities being undertaken either by the developer or local authority.

12.    The Department will provide ongoing technical assistance to local authorities on the categorisation of developments, on the formulation of an initial site response using the funding at 10) above, on the preparation of Site Resolution Plans, as well as planning and building control queries.

Site Resolution Plans

13.    City and County Unfinished Housing Development Teams will identify priority sites that should be the subject of Site Resolution Plans and will work with site owners, developers, funders and residents in their efforts to develop such plans, reporting to the National Co-ordination Team, with a view to ensuring that 300 Site Resolution Plans are in place by end 2011.

14.    City and County Unfinished Housing Development Teams will develop best practice approaches to the re-use of vacant housing in each of their areas by the end of 2011.

Legislative and Policy Framework

15.    The Department will immediately review existing legislation as identified by the Advisory Group and develop any necessary amendments to the legislation to ensure that there are adequate powers available to address the efficient resolution of unfinished housing developments

16.    The Department will review taking-in-charge standards for public infrastructure within housing developments such as roads, public lighting and piped services with a view to making recommendations on how best to develop national standards.

17.    The Report of the Advisory Group will be referred to the Building Standards Compliance Group for its analysis and response.

Housing Market and Planning Supports

18.    The Department will re-state previous planning guidance to planning authorities on specific policy aspects regarding better phasing of development, the provision of bonds / securities and other DECLG policies as regards sequential and phased development to inform the resolution of unfinished housing.

19.    The Department, working alongside local authorities and voluntary housing bodies, will engage actively with developers and site owners, including NAMA, in seeking to ensure positive uses for vacant complete and near complete housing and in line with the achievement of sustainable communities and balanced tenure of housing developments.

20.    The Housing and Sustainable Communities Agency will undertake an examination of the potential role for self-build and equity partnership type models to enable residents and new investors to assist in resolving unfinished components of housing developments.

What is good is that the DECLG have now appraised the situation and set out a set of action points.  It is particularly good to see a National Coordination Team being put in place and that legislation is going to be reviewed with a view to putting SRPs on a statuary basis and make amendments to existing legislation to aid their implementation.  I do, however, still have a number of concerns.

First, the speed of response.  We are four years into the housing crash and the development of the unfinished estates phenomenon.  It has taken 15 odd months to get from the announcement of a survey to a report and yet a lot of these action points are still at the reviewing and assessment/formulating solutions stage.  In the meantime, lots of people are living with a whole series of issues, many of them concerning health and safety.  The latter has been an supposedly urgent action point for quite some time.  It is true that some local authorities and developers/receivers have already moved to address some of these issues, but it is only now that the first €1.5m of funding is being released to LAs to tackle issues on the worst 230 identified estates.  The aim is to have 300 SRPs in place by the end of the year.  That is 10.5% of all estates (2,846) or on average 9 per local authority.  It’s not clear also whether that is 300 SRPs drawn up or actually in the process of being implemented.  We need to get to the implementation phase across all estates sooner rather than later.

Second, finance.  Finishing off estates and addressing their various issues is going to cost money.  There are 1,655 estates with works outstanding.  At present, there seems to be four possible sources of funding: developer bonds; the DECLG through its €5m public safety fund; NAMA and its development fund; developers/banks who own the estate or possible new investors.  There seem to be massive issues in drawing bonds down and if they can be accessed they are often insufficient to complete outstanding works.  The DECLG €5m split across 1,655 estates is €3200 per estate, which will hardly scratch the surface; NAMA will only invest in estates that are commercially viable and for which they hold the loan book; developers are bust and banks illiquid.  It really isn’t clear to me where the finance is going to come from for either developers or local authorities (where developers are absent) to finish off estates without central government funds being made available (and no such fund was announced today beyond the €5m).  One suggested solution is to recoup the costs from future sales, but again this would only work if an estate is commercial viable, investors come in, and market conditions improve in the short to medium term.  I would like to know a lot more about plans with respect to financing and I’m sure stakeholders would as well.

Third, I am still concerned that the model for SRPs is one of partnership and has the feel of voluntarism about it.  SRPs seek to encourage and not compel developers and stakeholders.  The two documents today are full of phrases like ‘encouraged to work’ and ‘should undertake’ rather than be ‘compelled to work’ and ‘will undertake.’  Without the new full manual it is difficult to fully comment on this, but it also still seems as if there is no conflict resolution mechanisms or clearly delineated objectives, milestones and timeframes for SRPs.  The danger is that negotiations become divisive and fractious and implementation effectively gets kicked down the road.  The role of the National Coordination Team is also not clear.  It seems to have some monitoring function, but its not clear if it’ll be hands on in terms of overseeing, assessing and directing progress and what it’ll do if SRPs are failing.

The next stage is clearly the publication of manual and the code of practice.  Hopefully they will turn up soon.  Today’s report and the DECLG’s response is a step in the right direction, but whether the action points and strategy being pursued will deliver, or deliver significant improvements for residents any time soon, is still an open question.

Rob  Kitchin