Empty nests: a 'ghost estate' in north Co Dublin

They are monuments to the excesses of the Celtic Tiger and an albatross around the property market's neck. The ghost estates left half-finished or sparsely occupied around the country are not only a problem for those who live in them, but pose a significant challenge for society as a whole.

Much of the debate so far has, quite rightly, focused on the inhabitants of ghost estates, who find themselves living in the middle of building sites with unfinished roads, little or no lighting and poor sewerage. These people now find themselves fighting with developers and county councils to have their estates made properly habitable.

Moreover, those empty units will impact on wider house prices. Buyers have a dilemma: why pay more for an apartment in a full estate when there's something similar going for half that price around the corner? On the other hand, why risk a development that might never be finished? In many cases, they may just opt to wait.

As long as apartments and houses lie empty throughout the country, there will be reluctance among buyers to move, even if they are lucky enough to have funding in place. This will hinder the market's recovery, with prices continuing to fall or stagnate as the oversupply is cleared. The National Institute for Regional and Spatial Analysis's recent report on ghost estates predicted that ? as a result of oversupply and outward rural migration ? it may take well over a decade before the extra units are occupied in some locations. The prospects are grim for many parts of the country, according to Marie Hunt, director of research with CB Richard Ellis.

"In areas of the country with a clear oversupply of vacant and unsold housing units, pricing remains under pressure and there is little likelihood of an improvement in demand or stabilisation in pricing in the near term. In cases where pricing is reduced significantly, by more than 50%, some sales will be achieved. Unfortunately, the counties with the greatest oversupply are in most cases the very counties where demand is weakest. While the oversupply in Dublin is likely to be absorbed over the next two years, in some locations it will take many years for the excess supply to be absorbed," she said.

On foot of the Department of the Environment's report on ghost estates – it identified 2,800 such developments including more than 120,000 units – the government has set up an expert group to advise on how best to deal with the issue. It should soon publish a draft code of practice on practical solutions to ensure the completion or resolution of difficulties with unfinished developments. They will have their work cut out for them, according to Hunt, because there is no simple solution.

"Doing nothing is not an option but there is, unfortunately, no one-size-fits-all solution to this issue. Some houses which have been built in the wrong location for the wrong reasons will have to be demolished, while the prospects for other vacant schemes will vary. Many argue that this vacant housing could be put to alternative uses such as social housing. However, in many cases, the ghost estates and vacant housing are unsuitable for these uses," she said.

The number of empty units in a ghost development is also of significance. The more sparsely populated it is, the bigger the problem. Commenting recently, Ronan Lyons, economist for property website Daft, pointed out that someone living in an estate where 10 houses are empty is better off than someone where half the estate is unoccupied.

"Your chances of "escaping" are much better than someone who lives in an estate of 100 homes where 50 are built and empty. Not only are you incredibly unlikely to be able to sell – at that young age, untouched homes enjoy a premium over second-hand ones – but also there are the externalities of living in a ghost estate, everything from fewer children for your own to play with to no public transport links because densities are too small," he said.

All things are not equal when it comes to ghost estates and, much like the boom, the importance of location is now more pertinent than ever. Getting out of the quagmire is going to be very difficult for counties such as Longford and Leitrim, where an unprecedented level of building has created huge overhangs which will take years to clear. However, while it is fair to say that urban areas will recover faster, even here it will depend on where the development is located, said Joan Henry, head of research with Savills Ireland.

"There are areas of greater Dublin where oversupply is little to non-existent, such as Swords, unlike other areas like Sandyford which has close to 2,000 units currently unsold. Our experience in 2010 has been that new units which are priced in line with the current market conditions – for example a scheme in Clare Hall, where the units are being sold at 66% less than at the top of the market – are attracting buyers. Negative sentiment and fear ahead of the upcoming budget will dampen activity for the rest of the year, however," she said.

Some Dublin apartments are now selling at a third of their peak prices and estate agents are reporting positive sales figures in recent weeks. The popularity of Irish Nationwide's Booterstown Development last month and high-profile sales like the apartments in Mullingar which sold out at rock bottom prices starting at €70,000 in April demonstrate that there are people willing to buy.

However, there is a possibility that when the market does begin to recover there will be a mismatch between buyers' expectations and the kind of properties on offer. This is more likely to affect Dublin, where the majority of empty apartments identified by the Department of the Environment are located. Now that the starter apartment is seen as a dead duck, those units are likely to lag far behind any resurgence in the market.