Archive for March 9th, 2010

How many vacant properties are there?

Before this blog entry begins, just to say that there are indications of an early response from the CSO on guidance given to enumerators whose judgment it was to define holiday homes in the 2006 Census. The “definitions” blog entry is likely to be updated shortly.

Right, firstly to say there is a general consensus that the number of vacant properties in the state is approximately 350,000. Because of the ways in which the data has been collated there is no statistical margin of error, but for most practical purposes, it can be agreed there are 350,000 vacant properties today in the State.

There is then some debate about how many of these properties are uninhabitable (obsolete), how many are deliberately vacant because they are used only occasionally in a fashion which could describe them as holiday homes. What we are left with doesn’t have a name but I will describe the remainder as the Real Vacancy Rate (the RVR). Most sources then say this RVR comprises a base (or standard or normal) vacancy rate (hereinafter called the standard vacancy rate or SVR)) and the remainder is called an overhang. The SVR does not have a precise definition but is intended to mean the number of properties which over a long period of time you would expect to find vacant in the state – they may be vacant because they are on the market (for sale or rent) or they may have been abandoned (a term not precisely defined in terms of itself or its effect).

What you have left when you subtract the SVR from the RVR is the overhang. Now some of the overhang could be on the market at present but given the statistics from the property sales websites it would appear that most is not. The overhang is presumed to be marketable property and although there can be a number of reasons why it is not presently on the market, the most commonly obvious ones are that professional sellers do not wish to depress the existing market with further supply, that sellers are prevented from selling because of commitments to financial backers, that professional sellers are waiting for a recovery in prices to maximise their returns from their property or that sellers are waiting for the intervention of NAMA to set prices or to purchase their assets.

The question then asked about the number of vacant properties is why different sources quote different figures. At the bottom end of the spectrum you have the Construction Industry Federation quoting 35-40,000 vacant properties, you have the Housing Minister quoting 120-147,000 vacant properties and you have the media quoting 350,000. Who is right? Well they possibly all are because when they refer to vacant properties they are qualifying the statements in some way.

CIF say there are 35-40,000 vacant properties but they are clear to state that this refers to their estimation of NEW homes. Indeed the source of the 35-40,000 is the Irish Home Builders’ Association (IHBA) Property Market Review and Outlook 2009. The relevant part of the report is probably on page 9 where it says “Sources estimate that there are currently in the region of 35,000 to 40,000 completed unsold vacant housing units in the country”. I was unable to find the precise “sources” in this 22-page document. I am not sure you can draw any conclusion from the absence of sources.

The Housing Minister, Michael Finneran, says there are 122-147,000 vacant properties in the country. He is referring to the overhang and specifically the overhang range set out in the DKM report. DKM said there were a total of  between 301,682 and 326,685 (excluding obsolete properties)  which were comprised holiday homes (73,476)  SVR (106,177) and overhang (122,029 to 147,032)

NIRSA say there are 302,625 vacant properties. This was their estimate of total vacant properties excluding holiday homes recorded in the 2006 Census (49,789), so their total vacancies were 352,414. They later amended the breakdown of these vacancies to be holiday homes (86,002), obsolete (44,425), SVR ( 87,356) and Overhang (121,777).

UCD say there are 345,116 vacant properties which comprise holiday homes (64,520) obsolete (9,898) SVR (98,980) and overhang (171,178).

There is a thepropertypin.com series of blogs that apparently estimated 350,000 in 2007/8. I have not had the opportunity of looking at the detail of this series of postings though they appear to have been prescient and competently prepared.

The media make different selections and they often do not compare apples with apples much to the displeasure of those who have produced the reports and who are then called upon to defend their work. There are many examples but the following from the Irish Times illustrates the condition.

Look out for part 4 of 7 (where are the vacant properties located).

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