New survey of ghost estates shows vast decline in incomplete estates

The Minister for Housing and Planning at the Department of the Environment, Community and Local Government, Willie Penrose today unveiled the results of an updated survey of so-called ghost estates – new estates constructed during Ireland’s housing boom which were left incomplete when the housing bubble burst and bank lending for property stalled. The report will be available tomorrow from the Department’s website, but in the meantime, the Department has kindly provided a copy of its spreadsheet which shows the address of every ghost estate and its state of completion, and level of vacancy. I have uploaded the spreadsheet to Google docs and it is available here.

The good news is that Irelandnow has only 2,066 such estates which is considerably down from 2,846 estates identified in the survey published in June 2011. There has apparently been quite a lot of work with completing estates, dealing with sewage systems, lighting, access roads and amenity areas.

Surveys of the ghost estates were conducted up to the 27th of September, 2011 and I note that there is no entry for the estate at Ballynagore near Mullingar, Westmeath which the council bulldozed in August/September 2011 and which was reported on here with before and after photographs.

So here’s the latest position with respect to our ghost estates with previous figures from the June 2011 survey in brackets.

Ghost estates should not be confused with vacant housing. Remember there are just over 2m houses and apartments in the State, of which approximately 120,000 are on ghost estates. So 95% of all dwellings are NOT on ghost estates. In terms of vacant housing, according to the preliminary Census 2011 results issued in June 2011, there are 294,202 vacant dwellings in the State. We will find out in 2012 how many of these are holiday homes, but at this stage it still appears as if we have some 100,000 homes which represent an excess over the long term average vacant housing stock, and this represents the overhang of vacant property that will act as a drag on prices, until used up. There is presently little new construction of dwellings in the State, the latest from the Department of Finance is that for the first eight months of 2011, 7,002 dwellings were completed, where the term “completed” means being hooked up to the ESB (electricity utility company) – actual construction is anecdotally understood to be less. Given the trend in the reduction in household size, it is likely that 17,000 new dwellings are needed each year to cope with smaller households. Obsolescence is anecdotally at a very low level in the State, in part due to the fact that our housing stock is so new. Our population is still growing, apparently with natural growth rates more than offsetting estimated net emigration, but housing need for population growth is probably 5-10,000 homes per annum.

It’s likely that you’ll see some headlines over the next couple of days claiming there are just 18,000 vacant homes in the country, but that just confuses ghost estates with vacancy.

UPDATE: 17th October, 2011. The Department for the Environment, Community and Local Government has now published its reports online and they are all available here. The Department is no longer classifying estates as nearly complete, 90% complete or less than 90% complete. In short since the last survey, an additional 30 ghost estates have been identified, 701 have been completed, there are still 109 where no real work has been started which means that there are 2,066 incomplete estates.

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Irish residential rents continue to stabilise in September 2011 with a 0.9% rise year on year; mortgage interest costs up a hefty 17.2% year on year

This morning Ireland’s Central Statistics Office (CSO) has released its inflation figures for September 2011. The headline Consumer Price Index (CPI) was up 0.3%  month-on-month and 2.6% year-on-year (up from 2.2% in August 2011). The biggest driver of inflation in the past 12 months continues to be the CSO category of housing-related costs, and within that, the most significant component is mortgage interest* which has risen a hefty 17.2% in the past 12 months and indeed 3.1% in the past month alone as domestic bank-driven interest rate rises take effect. Mortgage interest comprises nearly 7% of the CPI “basket” so the effect is significant. It is indeed amazing that the National Consumer Agency has still not complied with the European Commission condition inserted into the approved Bank of Ireland restructuring plan, that a mortgage comparison facility be added to the itsyourmoney.ie website to help borrowers move between providers and nurture competition in the mortgage market.

Elsewhere it seems that private rents continue to stabilise, though there was a monthly rise of 0.7% in September 2011, and an annual rise of 0.7%. It seems that in our financial crisis, the big correction in rent took place in 2009 with a 19% maximum decline, compared to a decline of just 1.4% for all of 2010. Since the start of this year there has been a 2.4% increase (mostly recorded in February 2011). So on that basis, I think it fair to characterise rents as stabilising. There is a view however that rents are artificially elevated at present as a result of the social welfare rent assistance programme. Although it is the case that many properties that are advertised for rent will not accept rent-assistance claimants, it is arguable that landlords for these properties still reference their prices to rent assistance provided by the State, which by the standards of other countries, is seen as generous (the latest allowances are available here) Will rent assistance survive the budget cutting as we to deal with our deficit? Minister for Social Protection, Joan Burton, has signaled that rent assistance may be in the firing line for the December 2011 budget.  We currently spend €500m annually on rent assistance.

*The CSO notes the following in respect of mortgage interest “In line with normal practice for a fixed base price index, the current approach to measuring mortgage interest in the CPI reflects the situation in the base reference period December 2006 when the standard variable rate was dominant. Subsequently, tracker mortgages have become more popular. This did not give rise to any difficulties while the standard variable and tracker mortgage interest rates moved broadly in line with one another, which would be the normal expectation. However, the decoupling that has taken place since August 2009 has resulted in dramatically different trends emerging. For example, between September 2009 and September 2010 the standard variable rate increased from 2.93% to 3.66% whereas the tracker rate did not change. The Mortgage Interest component of the CPI, which is largely determined by the trend in the standard variable rate, increased by 25.1% as a result and contributed +1.25% to the overall change in the All Items index. It is crudely estimated that the latter impact would have been reduced by between 0.2% and 0.5% had the Mortgage Interest component been calculated on a current weighting basis. Users should take this “weighting effect” into account in interpreting the mortgage interest related movements in the index”

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NAMA launches new-look website

In truth, if you’re a developer with multi-million euro loans that are being transferred to NAMA, or a property investor with a few million burning a hole in your pocket, then the appearance of NAMA’s website wouldn’t really matter at all to you – a “website under construction” notice and a contact address would be probably all NAMA would need provide, if that. On the other hand it came as a bit of a surprise last year when it was revealed in a reply to a question in the Oireachtas that it cost €2,457 per annum to “maintain, operate and monitor” the five websites under the NTMA’s umbrella, of which NAMA’s is one – the surprise was that it cost that much given the appearance of the NAMA site! This morning that all changed as NAMA launched a new-look site with more accessible information, facts and figures, questions and answers and – wait for it, wait for it – a couple of photographs.

This is the new-look website.

And this is a reminder of the old-look website.

Beyond the cosmetics, it is clear that some planning has gone into the role of this new-look website and there is new information (not new in the sense that it is contained in NAMA publications or press or other reporting, just new in that it is drawn together by NAMA in a predictable location – for example details about the tranches that the agency has acquired to date).

Although NAMA addresses it in its first “question and answer”, which approximates to FAQs on other websites, the absence of any search function for properties foreclosed by NAMA is indeed a deficiency. A simple country, county, property type search on NAMA’s foreclosed properties would enhance the website immeasurably. NAMA does say that this area will be addressed. For the time being, you still get a PDF which is unwieldy and can’t be sorted. I regret to say I am still trying to find the time to identify the 11 properties which were deleted from the latest enforcement list in August 2011, 11 properties which were presumably sold.

NAMA hasn’t released costings for the new website. Hopefully it has cost less than the incredible €1.5m which the worldirish.com website has cost to date. According to Alexa.com, the nama.ie website has a world ranking of #494,894 and an Irish ranking of #4,329  (Ireland’s main property sale website DAFT.ie has a world ranking of #7,774 and an Irish ranking of #7). The new-look website seems to provide an accessible, well-presented medium for a wide audience, many of whom will still be mystified by what NAMA is and does.

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