Saturday, 3 January 2009

Bargain Irish Homes - Ghost Estates On Fire Sale...

New rules may force 'firesale' of 70,000 houses...

BUILDERS could be forced to dramatically slash the prices of more than 70,000 new houses that are now lying empty across the country, a leading construction advisor has warned.

In a damning new analysis -- obtained by the Irish Independent -- it is claimed that developers will have to offload the massive volume of vacant homes in a 'firesale' before the Government's new energy guidelines come into effect on July 1.

The new study found the number of new homes lying empty in 'ghost' estates is far larger than was previously estimated. The findings reveal there are at least 100,000 'surplus' homes -- far higher than the 30,000 estimated by construction industry chiefs and estate agents.

According to the analysis, carried out by Tony O'Brien, head of business consulting for accountancy firm Grant Thornton, market conditions suggest some 30,000 of these will be sold in the current economic climate. But developers may face a race against time to sell the 70,000 remaining properties before the new environmental guidelines come fully into effect.

The Government's guidelines on energy efficiency, which were announced at the end of 2007, require new houses to be 40pc more energy efficient.

Mr O'Brien said that industry estimates of 30,000 to 35,000 vastly underestimated the number of new houses on the market -- and said his figure of 100,000 houses was also likely to be conservative.

He based his study, which took a year to complete, on the 2006 census and housing completion figures from the Department of the Environment.

Privately, leading real estate agencies the total number of empty houses is closer to 80,000.

However, the Construction Industry Federation (CIF) said it "absolutely, totally, totally" rejected the 100,000 figure.

A spokesperson said he was surprised Mr O'Brien had not consulted them about his study, since CIF members built 95pc of all homes across the country.

The spokesperson insisted the 35,000 figure continuously cited by the CIF and Homebond was correct.

Mr O'Brien said he expected that the CIF would disagree with him and claimed that builders cannot afford to keep the huge number of surplus new houses on their books.


"The key question is, will consumers wait to buy houses that comply with the new building regulations, which will offer 40 pc more energy efficiency which should be available soon, or will they be happy to buy an 'existing' new house that will be less energy efficient and is likely to have a lower resale value," he said.

He claims that builders will either "firesale" off their stock in the next six months or they may opt to "retro-fit" the existing stock to bring them close to the new building regulations.

The cost of additional work is estimated to be around €10,000.

The CIF also said 85pc of new homes surveyed by Sustainable Energy Ireland achieved a "B" but Mr O'Brien said the rating did not mean the houses used mandatory renewable energy requirement as required by the Government guidelines.

Report by Fiach Kelly - Irish Independent.

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