Why we'll end up bulldozing those unwanted houses on ghost estates
One of the most visible legacies of the property bust has been the "ghost estate". Every city and town in the country is ringed with new houses and apartments which have never been occupied.
Just how many of these unoccupied houses and apartments there are has been a source of sometimes sharp debate with some pessimists, including yours truly, putting the number potentially as high as 500,000 while the Construction Industry Federation, which represents the country's builders, has put the figure as low as 40,000.
So who is right?
Since Christmas there have been two serious efforts to calculate the number of vacant houses and apartments. In January a survey by NUI Maynooth's National Institute of Regional and Spatial Analysis (NIRSA), which advises the Government, estimated that there were over 302,000 unoccupied houses and apartments in the country.
A joint UCD/DIT report yesterday was even more negative, calculating that there were in fact 345,000 vacant houses and apartments.
The UCD/DIT report estimated that when temporarily unoccupied holiday homes and normal vacancy levels were factored in there were in fact 170,000 surplus houses and apartments.
With all due respects to both NUI Maynooth and UCD/DIT, in their perfectly understandable desire to be fair to the building industry, they have almost certainly produced estimates of vacancy levels which are far too conservative.
Any attempt at gauging the number of vacant houses and apartments in this country has to start with the April 2006 census. With thousands of enumerators knocking on every front door in the country, the CSO has a head start over every other organisation when it comes to collecting data.
The 2006 census revealed that there were 216,000 vacant houses and apartments in the country. This figure rose to 266,000 when unoccupied holiday homes were added. The census also put the number of households, families, couples, people living alone, in the country at just under 1.5 million and the total number of houses and apartments in the country at 1.77 million.
Since the 2006 census we have built a further 230,000 houses and apartments to bring the total up to two million. At the same time the number of households is at best unchanged with any increase recorded in 2006 and 2007 having been cancelled out by the increased emigration, of both nationals and non-nationals, experienced since then.
Subtracting the number of households from the number of houses and apartments puts the number of vacant housing units at up to 500,000. This is much higher than either the NUI Maynooth or UCD/DIT estimates.
In practice, the real figure is probably somewhere in the middle.
However, even 400,000 vacant units works out at more than one vacant house or apartment for every four households. That, no matter how you look at it, represents a chronically over-supplied market. This over-supply will depress prices for years to come.
So what is to be done about this huge over-supply? In the short-term, nothing.
Ireland needs the lower mortgage repayments and rents that lower house prices will bring. These will help reduce costs throughout the economy and go some way towards restoring our international competitiveness.
However, even after this happens, there will remain a rump of new homes, particularly those in the outer commuter belts of the larger cities and in the more remote towns and villages, which won't be able to find buyers at any price.
These houses are simply in the wrong place.
Very few people want to live in Ballygobackwards, stuck in the middle of nowhere 20 miles from decent shops, schools and pubs, no matter how cheap property prices there are.
There will come a time when NAMA or some similar body will have no option but to bulldoze thousands of our surplus houses.