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Bring in the bulldozers and bury legacy of Celtic Tiger

The collapse of the Irish property market has led to a new phenomenon, the so-called 'ghost estate'. These empty housing estates surround virtually every city, town and village in the country and have become the emblem of post-Celtic Tiger Ireland.

Many of these houses will never be sold and the sooner they are bulldozed the better.

A new report by NUI Maynooth puts the number of these vacant houses at 300,000 (an earlier report on the subject by a DIT/UCD team put the number of vacant houses even higher at over 340,000).

Under normal circumstances, if there was a glut of houses, prices would fall and the ghost estates would gradually fill up as buyers took advantage of the low prices. But there is nothing normal about our housing market.

Not only do we have too many houses, but many of these houses are simply in the wrong place. According to the report, a large proportion of these vacant houses are concentrated in counties Sligo, Leitrim, Cavan, Monaghan and Roscommon.

They are geographically remote from the major centres of population and many of the vacant houses they contain will never be sold, no matter how low prices fall.

The NUI Maynooth report estimates that up to 120,000 of the vacant houses in the country will never find buyers.

So what can we do with all of these vacant houses? Having recognised the fact that a large chunk of them will never be sold, there is no justification for NAMA, which will end up owning most of these ghost estates, to throw good money after bad on securing and maintaining them. Send in the bulldozers and flatten them.

But won't bulldozing badly located ghost estates drive up house prices in such areas and encourage further unnecessary building in the future? Not if NAMA plays its cards right.

Since it started operating, NAMA has proved to be a tougher cookie than many of us had feared, demanding much higher discounts on the bad loans it has bought from the banks. Up to now, NAMA has been taking over the loans of the larger developers. It will be late this year or early next year before it purchases the loans of the smaller developers.

When it does, it should be utterly ruthless. Ghost estates in Roscommon, Sligo, Leitrim, Cavan or Monaghan are essentially worthless. The only value they contain is if the physical structures on them were flattened and the land returned to agricultural use. This means that loans 'secured' on such ghost estates are worth no more than a couple of cent in the euro.

When it takes over such loans NAMA should be deaf to the pleading of local builders and their politician supporters. If writing down these loans to a realistic value, ie virtually nothing, means financial ruin for such builders, then so be it. Their fate will serve as a grisly reminder of the risks of building houses in the middle of nowhere for decades to come.


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