The oversupply of new homes may be far greater than suggested by the builders' representative body, writes JACK FAGAN
HOUSE BUYERS should be careful about giving too much weight to some of the announcements from the Irish Home Builders’ Association (IHBA). Its latest claim that there are only about 9,000 unsold new homes in Dublin city and county should be taken with a pinch of salt.
The IHBA also suggests in its 2009 market review that the number of newly built homes in the greater Dublin area accounts for less than eight months supply “in more normalised market conditions”. Even more astonishingly, it warns that “this will result in a shortage of new housing units in the Dublin area once confidence is restored to the market”.
Unfortunately, the oversupply situation appears to be considerably worse than suggested by the IHBA and the likelihood of a shortage arising in the near future is about as remote as Bertie Ahern’s chances of being elected to the park. For an organisation with significant financial and manpower resources and close ties to big and small developers up and down the country, it’s astonishing that the IHBA cannot come up with a more authoritative record of unsold homes – something that is badly needed in an industry with no official sales register. IHBA members know better than anyone how many newly completed homes are lying unsold in Dublin. But they are not showing their hand lest it discourage buyers from making commitments at this stage.
The organisation is equally vague about the level of vacant homes throughout the State since the collapse of the market, estimating that it is somewhere between 35,000 and 40,000 – “an average one year’s supply”. One is tempted to ask what average year could they be referring to because between 2000 and 2008 new home completions ranged from almost 50,000 to 93,000. This year’s figure is expected to slip to around 25,000. In 2010 it is due to fall again to 10,000.
To get back to the vacancy rate in the Dublin area, the IHBA would be well advised to carry out a proper study because a confidential report prepared by an industry specialist, and seen by The Irish Times, suggests that the 9,000 vacancy figure is wide of the mark. The number of unsold homes, according to the report, could be closer to 15,000, depending on how far the “greater Dublin area extends” and what villages and towns it includes. There is obvious scope for discrepancies in the two findings.
Anyway, the same report threw up a number of interesting findings, not least the fact that of the 15,000 available homes in the greater Dublin area, no fewer than 12,500 of them are apartments. These are concentrated in three main clusters – Tallaght, the Northern Fringe and Sandyford – though the oversupply also extends to Santry, Lucan, north docklands, City West and Finglas.
The Sandyford area has the largest number of unsold apartments, about 1,700 units, with some of them also in Stepaside, others in Stillorgan and more in Carrickmines. The task of clearing the backlog will be all the more difficult unless investors are encouraged to re-enter the market or some of the stock is designated as social housing. The report says that many of the investors who bought at the top end of the market are now over extended because of the decline in rents and would probably try to offload the properties.
The report estimates that there are about 1,500 apartments built and unoccupied in the Tallaght area, with over 1,000 of them owned by Liam Carroll’s Zoe group. Carroll’s misjudgement once again underlines his single-minded approach to development and his belief in his own instincts. By the same token he also built not one but two hotels in Tallaght, both now converted into rental apartments. Though the report estimates that there are around 1,300 unsold homes on the Northern Fringe – from Baldoyle over to the Malahide Road, including Donaghmede – it says that sales are more buoyant in this area because developers are dropping prices to shift the completed stock. It’s all about cash flow in these difficult days.
