Developers built about 170,000 more homes than were needed during the property bubble, academics claimed today.
The latest study on empty housing has found a total of 345,000 homes – 17% of all housing – are lying vacant.
The expert review found that when holiday homes, houses no longer in use and standard levels of surplus housing were measured, there was still no demand for about half the country’s empty homes.
University College Dublin and Dublin Institute of Technology also warned the State bad-bank Nama – designed to ease the banking crisis and ultimately reignite lending and the property market – could prolong the slump.
Lead author Dr Brendan Williams claimed prices builders pay for development land has to fall further, in turn knocking more off the value of houses.
“The identified vacancy levels have major consequences for the future prospects and valuations of development land,” the UCD academic said.
“Valuations of development land based on the expected sale of completed developments will need to be revised severely downward to reflect their current use and limited development potential.”
Dr Williams, of UCD’s School of Geography, Planning and Environmental Policy, said buyers and sellers may be resisting further price cuts as the market deteriorates further.
House prices have fallen by more than a third since the peak but some rural areas and sectors have been hit harder.
“Suppliers and vendors were unwilling in the short term to adjust prices, but such shifts become inevitable,” Dr Williams said.
“In the light of an excess supply of 170,000 this shift is expected in the near future.”
The UCD/DIT figures differ slightly from the last empty housing report.
The National Institute of Regional and Spatial Analysis at NUI Maynooth concluded in January that 302,625 houses were uninhabited, including properties for rent or for sale, homes not on the market and abandoned houses. The figure did not include an estimated 49,000 holiday homes.
That data was supported by startling figures from the same academics who said more than 600 “ghost” estates were scattered around the country.
The massive scale of oversupply had previously been put at between 100,000 and 140,000 by Housing Minister Michael Finneran and just 40,000 by the construction industry.
The UCD/DIT report went on to challenge the Government’s Nama plan.
It warned that market interventions which attempt to prevent downward price corrections could often delay rather than prevent the normal market decline and recovery process.
Co-author Dr Declan Redmond, also from UCD, said house prices in many areas were still at very high multiples of average incomes.
“Public policy interventions aimed at maintaining price levels in such circumstances can prove ineffectual and wasteful,” says Dr Williams.
“Interventions including those of the National Assets Management Agency (Nama) which attempt to prevent downward price corrections can often delay rather than prevent the normal market recovery process occurring.”
The report predicted the second hand market in sought-after areas of Dublin and new builds in parts of the capital with good transport would recover first.
It said vacancy levels in greater Dublin remained at 11.5% compared with 20.83% around the country.