'Scary time' as some sites come to a standstill

Gorey in Co Wexford is ringed with new housing estates, many of them still in the course of being constructed, writes Colm Keena.

Out the Courtown road is Clonattin Village, where to date 280 houses have been built, and another 110 are planned. Back near the new Dunnes Stores-anchored shopping centre, Ramsgate Village is a large, newly built housing estate where some of the houses appear unoccupied.

A woman out walking with her mother and her child says she has been renting a house in the development for the past year. "Some houses that were empty when I arrived are still empty," she says.

A few hundred yards down the road is the entrance to Meadow Gate, another new development of houses of differing sizes. While those closer to the main road look occupied, houses further in have the appearance of having not yet been sold. At the back of the estate, the latest additions to the estate are still under construction.

Lynda Crewe says she spent €240,000 on her two-bedroom terraced house in the estate last year, and now estimates the house is worth about €20,000 less.

"I think they're heading for a great fall [ in value]. A lot of the building sites in Gorey have come to a standstill. It's a scary time," she says.

Estate agents in Gorey who spoke to The Irish Times said sales of new houses stalled last year, though they say that prices have not come down.

"They're holding their prices while they wait and see what happens," says one experienced local estate agent. Many of the developers have made substantial amounts of money over the period of the building boom, and are in a position to wait.

He says the price of secondhand property has not yet fallen, but predicts that values will have to fall if sales are going to resume. "People just need to get used to the idea."

Census figures show there was a major population influx into Co Wexford in the 2002-2006 period, with the Gorey area recording a population increase of 31 per cent over the four years, bringing the population to 7,797.

In many ways it is typical of towns - in what has become a long-distance commuter belt ringing Dublin - such as Arklow, Mullingar and Dundalk, which have significant new housing stock and stalled sales.

Analysts believe the value of new houses in such locations could be particularly harshly affected in a housing downturn, as the demand for such housing was driven by price, not choice. Softer prices generally could see a sharp drop in demand, they say, and much depends on the interaction of demographics and supply.

If a large number of migrant workers from building and other sectors are laid off and move overseas, a significant amount of extra housing will become available. Forty thousand workers who rent houses at a rate of, say, four people per house, would free up 10,000 properties if they moved overseas. On the other hand, builders are expected to complete considerably fewer houses this year compared to 2006 and 2007, and the reduced supply should bolster the market.

How such matters balance out will be one of the key factors in developments in the market this year.