IT HASN'T been much of a summer break for Ireland's beleaguered property industry. Even though more than a year has passed since the recession brought an end to cheap bank debt and we reluctantly acknowledged that the property bubble was about to burst, the flow of bad news has continued right through the summer months, writes JACK FAGAN

In other years the courts normally closed during the holiday period for all but exceptional cases but this time round the Four Courts remained as busy as ever as banks moved to copper-fasten their claims on development land and investments before Nama gets into full swing. More often than not, the developers put their hands up and accepted that their plans were no longer financially viable.

The whole debacle has served to remind us how a deeply flawed banking system can allow money to be handed out willy-nilly, often to groups of investors with little or no practical knowledge of the construction industry. In a great many instances the banks funded young “executives” who went on to push site values to unsustainable levels.

While the industry anxiously awaits the arrival of Nama to take over troubled property assets and hopefully allow the banks to start lending again, the initial sweep is likely to be largely focused on the big expensive sites at the heart of the crisis.

That leaves a huge number of secondary sites and partly built housing estates in limbo. Realising that it could take years for Nama to get around to all these sites, some of the banks have just appointed estate agents to help them clear the decks. For a start, the value of sites will be heavily written down, possibly by as much as 60 per cent in some provincial locations, in the hope of shifting them. To get the ball rolling, the banks will even consider developing some of the sites on a joint venture basis with builders who have a good track record. Working capital will be made available to get building moving again. With the value of these sites drastically reduced, it follows that the builders will be in a position to pass on the benefits by offering apartments and houses for sale at substantial discounts – maybe as much as 50 per cent or more in some provincial towns.

The new strategy may well have been influenced by the recent success of a marketing campaign for a slow moving housing scheme in Cavan. To offload the houses, the liquidator set prices at €100,000 for a three-bed semi and €185,000 (a reduction of €200,000) for five-bed dormer bungalows. Not surprisingly, the development was oversubscribed by at least 100 per cent.

Frank Conway of Irish Mortgage Corporation says this is the type of deal people have been waiting years for “and now that it has arrived they are grabbing the value with both hands”. Cavan, renowned for lakes and bacon-and-cabbage eating houses, can now claim some of the cheapest new homes in Ireland. Who’s next?

Call it what you like, but it has all the ingredients of a fire sale designed to help the banks recover some scarce funds. With so many first-time buyers on the lookout for bargains, the banks are well aware that cut-price homes will still be snapped up in many locations, particularly in the Dublin suburbs. For the banks it makes sense to get the best of the sites developed rather than preside over a landbank with declining values and possible planning issues down the line.

It will be a different matter altogether for some of the remote sites and the partially built housing estates in the midlands which have been lying idle for months. Even with values on the floor, it will be impossible to find buyers for many of them. The same goes for a great many houses in little known villages which were rented by Eastern European workers. Most of them left as soon as the construction industry ran into trouble.

Even more troublesome for the banks are a number of high value housing estates – at least two of them in fashionable Galway resorts – which failed to sell when the market collapsed. What is to happen to these exclusive homes which had been expected to sell for €2–€3 million? No one seems to know at the moment.