Why 'ghost estates' are still an issue


Unfinished estates and empty houses are more than just a problem of negative equity says Professor Rob Kitchin

BILL Nowlan argued (Property, November 18th) that the issue of unfinished estates is relatively trivial and we should not be too worried about them.

His argument was that there has been much misinformation in the media about housing vacancy and unfinished estates, with only 2,846 such estates in the country and the number of unsold and unfinished units on them relatively small (23,250 complete, 9,976 nearly complete; 9,854 where construction has started) in comparison to the overall stock of houses (1.96 million).

For him, the estates are part of a normal cycle of boom and bust, and their principal problem is one of negative equity. A recovery in the housing market will see the estates issue disappear.

I agree that there is a lot of misinformation about vacancy and unfinished estates, with the media conflating both oversupply (120,000-plus) and overall vacancy (300,000-plus) with unsold units and incomplete units (43,000).

The problem with his argument is that it attempts to shift the focus of attention from oversupply to overhang, and it suggests that unfinished estates have few problems that need redress beyond financial ones.

Overhang is unsold new houses. Oversupply is the number of units in excess of household demand taking into account holiday homes and an expected rate of vacancy.

The Department of Environment acknowledges oversupply to be between 122,029-147,032.

The sizeable gap between overhang and oversupply is troubling, because it suggests an excess of houses with respect to households that extends beyond unfinished estates.

We need to consider housing as a whole, including what might come onto the market when it turns, and not fall into the trap of focusing solely on unsold units.

As anyone who lives on an unfinished estate will be able to testify, a great number of them suffer from issues relating to health and safety, security, anti-social behaviour, building control and planning compliance, bonds and finance to complete, and negative equity.

There are 78,195 households living with these problems, on estates where on average 35 per cent of units are unoccupied or unfinished.

There are uncompleted units on 1,475 estates, 635 of which have more than 50 per cent of units under-construction.

There are 777 estates consisting of 10 or more units where 50 per cent of units are either under construction or vacant (this does not include planned units that were never started).

This is not trivial.

The market alone is not going to correct these issues. We presently have a very weak market. The next generation of potential homeowners are emigrating in droves, there is high unemployment, and obtaining a mortgage is difficult. 90,000 households are in mortgage arrears and over 250,000 in negative equity.

Confidence in property is low and is unlikely to return in the near future.

Completing estates and addressing problems requires investment. In this context, the overhang of 44,030 units is an issue, and so are the other forms of oversupply (empty second-hand houses, investor properties, rental units and one-offs).

The unfinished estates survey was useful because it provided us with a good picture of the unfinished estates phenomenon, but let’s not now try to convince ourselves that these estates are not a problem beyond negative equity, that the housing market will be fine once we work off the overhang (as if that will happen anytime soon), and that the present boom and bust is a “normal” event (its scale and extent is far bigger than anything else in Irish history).

Any unoccupied house that has been built for some time needs maintenance, unfinished estates need completion, low occupancy estates need residents, the issues above need redress, and the issue of oversupply rather than simply overhang remains in play.

Professor Rob Kitchin, is director, National Institute of Regional and Spatial Analysis (NIRSA) at the National University of Ireland, Maynooth