Ghost towns

Every evening in Dublin as the sun begins to set, tourists queue at the bus station for the gothic ‘ghost bus’ to arrive. For the next two hours, the bus drives round the most haunted spots of the Irish capital, taking in graveyards and other sites famed for their supernatural phenomena.

But away from the crowds, Ireland is haunted by a different and altogether more real phenomenon. Spread throughout the country are ‘ghost estates’, streets of empty new-build houses entirely forgotten following the collapse of the Celtic Tiger’s property boom in 2007. Work started on these estates at the height of those boom years, when property developers were lured by generous loans from banks to build new houses on cheap land across the country. House prices shot up by as much as 429 per cent in Dublin. But now, following the burst of the property bubble, an estimated 300,000 houses lie unsold and empty.

Oversupply

Recent research by Ireland’s National Institute for Regional and Spatial Analysis discovered 621 such estates where more than half of the houses are yet to be finished or stand empty two years since construction began. In some areas, developers were so enthusiastic that the number of homes built rapidly outstripped demand. In County Leitrim, 2,945 houses went up during the boom years. Only 588 were needed, creating an oversupply of 401 per cent.

Barry Owens, a property developer, is conducting his own ghost tour of the Green Park West estate in Mullingar, County Westmeath. Clutching a heavy chain which holds keys to all 29 empty properties yet to be sold, he tells Inside Housing that his father’s firm, Johnny Owens Estates, has been forced to drop its prices on the 40-house estate by as much as 50 per cent. While the three-bedroom houses began life on the market at €295,000 in 2008, they now languish on estate agents’ lists at €150,000.

There are plenty of people taking the blame for these acres of empty homes. In a paper that he presented to the Irish Planning Institute’s annual conference this April, Bill Nowlan, well-known chartered surveyor and director of WK Nowlan and Associates, described the chain that led to the explosion of ghost estates: ‘During the boom, development profits were perceived as being so big and risks so low that anyone and everyone became a property developer. The industry grew exponentially. The proverbial butchers, bakers and candlestick makers became developers.

‘This was fuelled by easy credit to developers and easy loans to house purchasers. While the music played a tune of rising demand and rising prices supported by a torrent of easy cash, all were riding high, cheered on by media and politicians and lots of big egos.’

The ghost estates are full of good homes - all generous proportions - which would have flown off the market at its peak. ‘They are real high quality houses,’ says Mr Owens, ushering me into the smart show home. ‘They are made of concrete, they are well-insulated and they have excellent sound-proofing. If this was two years ago, we would have finished all these houses and we’d be getting to the end of the next development by now.’

One of the properties is a hive of workmen painting and sanding. This is the first home Johnny Owens Estates has sold for a while and one of just 11 to sell on this estate in the past five months. The rest still exhibit windowpanes clad in protective coverings and wires hanging from the walls. Behind those houses is a bare patch of land where the builders originally planned a further 40 homes.

Knock-on effects

The drop in the market has been so steep that the firm has had to cut its workforce from 160 to 30 during the past six months. Although Mr Owens believes things are starting to improve a little - with the sale of that one home on the estate this month - demand is unlikely to pick up sufficiently to justify taking anyone else on, or starting work on the second phase.

It’s a similar picture just down the road on the Cloon Lara estate. Though Mullingar itself is a bustling market town, this development is silent. Rows of bare-faced houses sit behind an upturned sign advertising the ‘magnificent new development’. The view from the properties which did sell is not pretty either: the developers have given up entirely with the houses on the other side of the street and abandoned the foundations and a tangle of pipes.

‘We have to get the grandchildren straight in the house when they come round,’ says one woman, who bought her house at the boom’s height. ‘It’s not safe for them to play on the building site out there. And I don’t like having it as the view from my front window.’

Three doors down, Stephen Cole is philosophical about the dramatic fall in value he has seen his property take since he bought it for €250,000 two years ago. ‘It’s not something we could do anything about,’ he says. ‘Although I don’t know what they were thinking, building so many homes out here.’

System failure

Mr Owens doesn’t accept that his firm made any mistakes when developing the Green Park West estate. ‘It’s the bankers’ fault, not ours,’ he says. ‘We didn’t know this was going to happen. No-one saw it coming except the bankers and now we’re stuck with it.’

Though the anger against the financial services industry strikes a chord with the UK’s economic situation, where hundreds of billions in taxpayers’ money has been poured into banks deemed ‘too big to fail’, this country is unlikely to see anything similar to the Irish phenomenon where a fifth of all homes are unoccupied. This is due, in part, to the differences in the planning systems operated by the two countries.

The Irish planning regime is one of the key factors in the growth of these ghost estates, says Rob Kitchin, director of NIRSA. It was the planners who approved developments in the middle of the countryside, or on the outskirts of small towns where there was no existing demand for housing. Many of the developments lacked supporting infrastructure such as transport or nearby schools and shops.

‘The Planning and Development Act 2000 was the first major piece of planning legislation for years in the country, and what it did was to create such a demand for planners that they were rushing anyone with a vaguely related job through short courses so that they could become planners,’ says Stephen Hill, a member of the planning and development board at the Royal Institution of Chartered Surveyors.

‘While in England there would be consultation on whether there is enough demand for the development and whether there is proper capacity for the town to grow, planners were giving permission to developments without this level of scrutiny.’

Ciaran Cuffe, Irish minister for planning, has promised to reform the system to prevent this phenomenon happening again. ‘We need to make our planning system stricter,’ he tells Inside Housing. ‘We need to prevent housing speculation and I would hope that investors would look at the demand in the area from now on. Besides, there isn’t much chance of this happening again for a while.’

Mr Cuffe, who has been in the post since March, wants new developments to be subject to much wider consultation before council planning departments give them the green light, and for much of the land which was zoned ‘residential’ by town planners during the boom to be re-zoned to prevent further development.

But for now, the government still needs to draw up a strategy for these estates, the associated debt of which has been transferred to Ireland’s ‘bad bank’ the National Asset Management Agency. While it draws up a detailed inventory of where the ghost estates are, its priority is to support those families left stranded by making sure the half-finished developments are properly lit and serviced.

A social solution

There is little chance of the estates filling up naturally over time. In some areas, the over-supply is so great that it will take up to 10 years for it to be met by natural housing demand. In fact, the number of ghost developments has reached such a level that NAMA has announced it is considering pulling them down.

Mr Cuffe says that where badly planned properties have been left half-built in poor locations, the best answer might be to demolish them. ‘This would be the absolute last resort,’ he says. ‘But many of them are unsafe and are never going to be used.’

There are growing calls to convert the completed properties into social housing. The Campaign to Use Buildings that are Empty, run by West Cork landlord Carbery Housing Association, is lobbying for this. Carbery secretary Joe Ospina says: ‘There are 80,000 households on the housing waiting list in Ireland, and our estimates suggest that there could be 30 per cent more than that who are in housing need. Some of those ghost estates could be used to answer that demand.’

One of the key barriers to transferring this brand-new stock to housing associations is lack of funding. The government has withdrawn the Capital Loan and Subsidy Scheme for social landlords, which previously would have given them the means to buy some of these homes - typically €170,000 per unit plus €50,000 for site costs.

Mr Nowlan believes the solution could lie in housing associations issuing government-backed ‘land bonds’ to finance ghost property purchases at around €75,000 per home. They could then rent them to tenants for around €120 a week which would cover the cost of the bond and of maintaining the property. Once the market picks up, the landlord could sell the property and refund the bond.

Mr Cuffe and Michael Finneran, the minister responsible for social housing, are working together to see whether some of these empty properties might be used to help satisfy housing need, or to serve as other community facilities. But Mr Cuffe warns: ‘We should be shy of immediately assuming that empty houses can perfectly meet the needs of social housing clients.

‘We are dealing with vulnerable people here and we do not want to shoehorn them into homes just to solve a wider problem.’

Have your say

You must sign in to make a comment