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04/08/2010

The advertising catalogue promised a new residential development, with a creche, tennis court and a mini golf course, minutes from the centre of the Irish town of Longford.
 
But as the leaking sewerage, pot-holed roads, lack of street lights and abandoned half-built houses around his home testify, the Silver Birches estate is far from what karate teacher John Killane had hoped for his family.
 
Wiring and abandoned building materials are scattered across the site, making the grounds a dangerous playground for his children.
 
He and his wife say that with the developer in liquidation and with property prices slumping, there is little they can do but wait for help from the local council.
 
"If I were to try to sell my house right now, I'd say I would be laughed off the face of the earth," Killane said.
 
With more than half of its 50 houses empty or unfinished, Silver Birches has been dubbed a "ghost estate" - one of 620 residential developments around Ireland that are a haunting legacy of the former Celtic Tiger's property boom and bust.
 
After two years of austerity, Ireland still faces a slow climb out of recession as it tries to deal with the fallout of a crash that left an estimated oversupply of at least 100,000 homes and the cost of rescuing its exposed lending sector mounts.
 
The government set up a "bad bank", the National Asset Management Agency, to cleanse commercial banks of shaky property loans worth a nominal €81 billion (HK$818 billion). It says the body, which will eventually become the country's biggest landlord via non-performing loans it buys, is an essential tool to clean up the stricken housing and banking sectors.
 
While the agency still has to finish transferring the loans and conduct an inventory of properties, it is still unclear if stalled projects can be rescued or what avenues of recompense, if any, may be available to buyers such as Killane. The government is considering options like social housing. But it could also wipe the slate and bulldoze some estates.
 
"The ones closer to Dublin will probably be occupied over the next few years but I think particularly in some counties far away from Dublin, we'll see hundreds of units vacant for a long period of time," said Ciaran Cuffe, a minister of state whose portfolio includes planning, heritage and horticulture.
 
Ireland enjoyed a decade-long property boom when developers were lured by generous loans from banks to build houses on cheap land to serve a stream of workers who, rather than pay sky-high prices in Dublin, preferred to pay slightly less and commute.
 
But the 2007 bursting of the bubble plunged Ireland into its worst recession on record, leaving an estimated 300,000 unsold or unfinished houses. Cash-strapped developers abandoned projects still in progress, leaving owners of overvalued homes surrounded by bleak, deteriorating sites.
 
Almost 200,000 homeowners are facing negative equity by the end of 2010, official figures show.
 
"I am stuck with a house that nobody would ever consider buying and I will be in debt for the rest of my life," said one housewife on a "ghost estate", declining to be identified.
 
The mother of two said she would be lucky to get €200,000 for a home for which she paid €320,000 three years ago.
 
With house prices still falling, cut-price sales are becoming a feature of the severely depressed housing market as more construction companies go into receivership.
 
The pace of decline in house prices slowed to 1.7 per cent in the second quarter, a survey showed on Thursday, while prices have fallen 35 per cent since the peak at the end of 2006. While the assets management agency is under no pressure to sell assets it takes on, its critics fear its unprecedented scale can tip the balance of the market if it does not conduct its sales carefully.
 
Some developers, however, are determined to finish their work. Johnny Owens sold three houses of his 45-property Coill Rua estate in Mullingar, County Westmeath, in June 2007 and then nothing until last January. He owes banks €20 million but maintains the estate and sold 12 houses this year, all at about half of their original price. He wants to build another 40.
 
"I'm not leaving this site derelict. I am going to work while ever there is any blood left in me," Owens said.
 
Reuters
 

 
This article can be found on South China Morning Post, Wednesday, August 4, 2010



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