Ireland's empty house hangover
DEMAND for housing in the new homes market is still underpinned by two key elements: tens of thousands of young Irish people in the 20-35 age group; and tens of thousands of immigrants of a similar age. A few commentators have suggested that some of this demand could easily be met from a mysterious overhang as shown by the Central Statistics Office (CSO) in its analysis of the recent census of population figures.
This analysis showed that as many as 265,000 homes were vacant last April - an increase of 94,000 on the vacancy level disclosed in the 2002 census.
However a call to the CSO revealed that a substantial portion of these homes are under construction. Another substantial portion are holiday homes. Precise figures won't be available until next April.
Professor John FitzGerald undertook an analysis of the vacant homes in the 2002 census figures and found that holiday homes accounted for more than 104,000 of them and that in many western counties holiday homes accounted for around 20% of housing stock.
At the time of his analysis some commentators expressed concerns that as many as 39,000 Dublin homes were vacant. However most of these were holiday homes and it is understandable that not all of them would be occupied in the off-peak period of early April when the census was taken.
Admittedly an increasing number of these are the town houses which people like Edward Haughey, Dermot Desmond, Johnny Ronan and Denis O'Brien use when hosting parties or meetings for business guests and friends on the occasion of football matches, business meetings, and concerts, etc. Country TDs and ministers also use them during Dail sessions.
But in fact a substantial portion of the Dublin second homes market is bought as investments to meet demand for a niche sector of the tourist market. Demand for self-catering, short-letting residences has been boosted by families visiting their immigrant offspring in Dublin and finding that self-catering is much less expensive than hotels.
Shortage
So unfortunately house hunters should not expect this sector to alleviate the shortage of homes in Dublin. Indeed the Dublin shortage looks set to worsen. Estate agents Hooke & MacDonald point out that demand in Dublin is expected to increase from its current level of 26,000 to 31,000 in less than two years. At the same time supply looks set to fall because of the recent high level of planning refusals.
Consequently the shortage of new homes, especially on Dublin's southside, also looks set to worsen and as a result this see this area could continue to see house prices increase while other areas fall.
Areas that may be especially vulnerable are some of the towns outside the Greater Dublin Area. There have been anecdotal reports of some developers earlier this year holding on to fully built homes in the expectation that SSIA monies will help to boost demand. These developers saw house prices rising at three or more times the cost of borrowing and it made financial sense for them to leave them empty as they were generating a better return than having the money in the bank.
However, now that the rate of house price growth looks set to slow to a level closer to the cost of finance, such developers are off-loading these empty homes.
Meanwhile in England the overhang of second homes has also increased. Nearly 300,000 homes have been empty for more than six months, according to research carried out by Halifax. The bank found that 1.6% of all privately-owned dwellings 290,862 are empty.
The highest proportions were in the North West, in areas such as Burnley and Liverpool, where more than 5% were empty.
In cities such as Newcastle, Manchester, Birmingham and Leicester, more than 3% of privately-owned homes lacked occupants.
- Donal Buckley
