herald

Friday 15 December 2017

Dan White: Empty estates could now be a real lifeline

With property prices collapsing by up to two thirds, is now the time to buy?

With property prices collapsing by up to two thirds, is now the time to buy?

There are apartments for sale in Mullingar for under €70,000. Why are these being offered so cheaply?

Because the builder couldn't sell them for their original prices of €202,000 and upwards and went bust. The apartments are now being offered for sale by the receiver, accountant John McStay.

So what do you get for €69,950?

For that money you only get the 48sqm (516 sq ft) one-bedroom apartment. A two-bed will cost you €82,450 and a three-bed will set you back €98,000.

How did things get to this?

In the boom years Ireland went building-crazy. In what future generations of archaeologists will undoubtedly conclude was some sort of construction cult, hundreds of thousands of properties were built, some in the most unlikely locations. Now that the bubble has burst we are left with a massive overhang of unsold new homes and apartments.

How many unsold houses and apartments?

That depends on who you talk to. The Construction Industry Federations puts the overhang at just 40,000. However, other organisations put it much higher with NUI Maynooth estimating that there were over 300,000 vacant houses and apartments while UCD and DIT put the number even higher at over 340,000.

That sounds like an awful lot of vacant houses and apartments?

It is. There are now up to two million houses and apartments in the country but just 1.5 million households. This means that there are potentially up to 500,000 unsold or vacant houses and apartments out there.

At the same time, underlying demand for new houses and apartments has collapsed from up to 45,000 a year at the top of the boom to as little as 20,000 now.

Has this anything to do with the 'ghost estates' phenomenon?

It is this glut of unsold new houses and apartments that has created that unique feature of post-bust Ireland, the 'ghost estate'. Indeed Tailteann Court, the development in which these apartments are being sold, has the dubious honour of featuring on ghostestates.com.

Even so this sounds like remarkable value. Should we take the plunge and buy now?

For someone living and working in the Mullingar area Tailteann Court, particularly one of the larger apartments, is definitely worth looking at. For someone living and working in the Dublin area, these apartments work out far less cheaply when the cost of commuting is factored in.

So what should potential buyers closer to Dublin do?

Sit and wait. Look around you. You don't have to go as far as Westmeath to bump into ghost estates. There are plenty far closer to the capital. As the banks transfer their bad loans to NAMA in the coming weeks, new properties in many of these ghost estates will start to come on the market at what would previously have been thought of as ridiculously attractive prices.

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