by John Galt
June 10, 2012 13:50 ET
The news from Ireland and the idea that the PIIGS will find nirvana with each bailout and an automatic path to recovery continues to be destroyed by actual real statistics and the harsh reality of the severity of the Great Depression of 2008. A report from Deutsche Bank quoted in this morning’s Irish Independent states that there are 289,451 empty homes plus an additional 15,000 vacation homes across this small nation. When taking average population growth, the year 2055 appears to be the target year for when the “glut” in housing will balance with population growth. The map below from this article illustrates the severity of the problem:
The map shows this horrific proportion of coastal vacancies where the red indicates 25% levels or higher vacancies and provide a visual indication as to just how severe the housing crisis really is. This one portion of the story tells the tale of demographics and economic depression Ireland will continue to endure:
The report says that if current population trends are sustained, housing oversupply will take 43 years to clear (this excludes holiday homes from unoccupied houses in the calculations). If holiday dwellings are included in calculations, the oversupply will take 57 years to clear.
However, the 2011 population growth figures were well below the levels seen over the previous decade. But such is the scale of vacant property that even at pre-crisis, boom-year population growth levels it would take almost 10 years to clear the backlog. And this is before taking into account developments which may subsequently be completed, and houses which are still being built — 10,480 in total in 2011.
Our vacancy rate of 15 per cent is almost five times greater than in the UK. The average vacancy rate in England is 3.2 per cent, with 719,000 empty homes out of 22.8m.
“Barring a sudden and sizeable recovery in Irish net migration, or a politically controversial policy of demolishing large volumes of excess housing stock, housing oversupply will remain a feature for many years, possibly decades, to come,” says Deutsche.
In other words, the Irish are facing the almost exact same dilemma the United States is facing yet we managed to punt the problem down the road by injecting massive amounts of fiat funny money into the failing system while the Irish are held hostage to a treaty which will keep their real estate industry and thus a large portion of the population trapped in a financial prison. The U.S. has failed to recognize the problem while the voters in Ireland are under the misguided belief that Brussels and Berlin will work with London to solve their real estate nightmare. Unfortunately for all parties involved, a catastrophic economic collapse and reset is the only possible solution to the problem and forestalling the day of reckoning will only make matters worse.
To read the entire article by Nick Webb, click on the link below: