Ghost towns plague Ireland as unsold houses litter the country

As many as 35,000 brand new homes are lying vacant in Ireland

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As many as 35,000 brand new homes are lying vacant in Ireland, according to the country’s largest securities firm, Davy. That figure is up from 20,000 just 18 months ago.

The office vacancy rate in Dublin at the end of the second quarter was 21%, compared with 8% in London and 10% in Berlin, according to the CB Richard Ellis Group.

According to Bloomberg, in the village of Gowna, Co. Cavan, located 80 miles from Dublin, the price of several five-bedroom houses have been cut to €400,000 ($590,000) from the original asking price of €550,000 ($810,000), Liam Reilly, the Irish realtor selling them, told the press. To date seven of the 14 houses still remain unsold, as Irish banks continue hoard their cash after going crazy during the boom, he said.

The share of Irish banking assets in property-related lending grew to more than 60% in 2006 from less than 40% before 2002, according Patrick Honohan, the new governor of the Irish Central Bank. Much of that lending was used to finance huge property developments, which now lie idle or unfinished.

“The big people made the mistakes and the little people are paying the price,” said Reilly. “The National Asset Management Agency (NAMA) is the only game in town now,” he added, referring to the government agency designed to deal with the crisis in the banking sector while keeping the interests of the taxpayer in mind.

“But I’m nervous about it in the long term because some of the debt will never be recouped.”

Irish Finance Minister Brian Lenihan plans to detail how much Ireland will pay for the €90 billion ($131 billion) of real estate loans that are now crippling what until 2006 was one of Europe’s most dynamic economies. In a financial gamble unprecedented since the foundation of the state, the Irish government will now become the owner of loans for property developments that have plunged in value.

Ireland is enduring the worst economic slump of any developed nation since the Great Depression, according to the Economic and Social Research Institute in Dublin.

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Nster.com