Hill house, the luxury riverside development on the banks of the Thames at Thamesmead was sold out before it was completed at £250,000 for a 2 bedroom apartment and £400,000 for a penthouse suite. Today, the development lies largely abandoned, swarming with vermin and drug addicts.

Built by Persimmon 2 years ago, the development has become a pointed reminder of the ravages of the credit crunch. The once glistening balconies and marbles hallways are now run down as front doors have been barricaded by metal sheeting to stop squatters. The amazing thing about Hill House is that of the 84 separate units that were initially sold; an unbelievable 82 have been repossessed. Apartments that once sold for £250,000 are now changing hands for less than half that amount or £115,000. The penthouses are fetching barely $135k. Soaring mortgage rates and huge hikes in the cost of living have seen almost all the buyers pushed past their limits and hit by heart-breaking repossession orders. 
 
Taxi driver David Adaiat is one of the two original buyers hanging in there despite his home having lost more than HALF its value. He bought his third-floor river-view apartment for £269,995 at the height of the buying frenzy in June 2006 as a family home for his wife Esther, 38, and their teenage daughter Dami. 
 
Shattered David said: “I’ve just had the place valued after my mortgage deal came to an end. 
 
“They told me it’s now worth just £130,000. I nearly fell through the floor. It’s unbelievable. That’s so much lower than we paid. 
 
“This whole place has become like a ghost town.”

Most of the repossessed properties are standing empty with only a few souls brave enough to live among the cockroaches, rats and squatters.  The once pristine grounds are overgrown and the development itself is a complete mess since the maintenance fees are left unpaid. A far cry from their initially £250k price tag, now the units are being bought up by local housing associations and rented to grateful students for under £400 a month.  The students who live there can’t believe their luck. Thanks to the credit crunch, they have great pads…it’s just a pity the neighbours aren’t a bit more sociable!

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Tags: Credit Crunch, David Adaiat, House Prices, Housing, Mortgage Lenders

The Celtic tiger has turned into a pussycat…its official. Ireland, after a decade or more of break neck economic expansion has slammed on the brakes…and how! It is the first euro zone country to slip into recession and my bet is that it won’t be the last…far from it. Everything has turned south…the service sector, manufacturing, construction, financial services and housing. The banks are they latest to fall foul to the global economic meltdown…with some so close to the edge that a state guarantee of their assets was deemed necessary.

The trend in recent year has been the reversal of the out flows of Ireland’s best and brightest who lerft in droves in the 70s and 80s for any work they could find. You couldn’t walk through Dublin airport without seeing a huge poster begging the brains not to get on the planes back to London and New York after the Christmas holiday to see mammy and daddy has finished. Can this trend reverse once again? It will…if the high tech companies that have called Ireland their European base up stick and jump on an Aer Lingus plane with a one way ticket to Lowtaxville.

Ireland was the jewel of the Euro zone project. The shining beacon to the Baltic States, Poland, and the former soviet republics of Latvia, Lithuania and Estonia all eyed Ireland’s remarkable economic turnaround with envy and sweaty, anticipatory palms. “We’ll get ours soon” they all thought, as they admired Ireland from a far like a shy teenager admires the prom queen from across a dancehall.

In reality, they are unlikely to get anything close to what Ireland enjoyed, perhaps with the exception of Latvia which enjoys a well educated workforce and low corporation tax rates. Ireland had a convergence of good fortune and a long time in building a solid base for the prosperity it enjoyed. It trained it workforce, build out its infrastructure with the help of EU handouts and was able to push the corporate tax burden onto its well paid citizens while giving its corporate “guests” a bit of a carrot to do business in Ireland in the form of too hard to refuse corporation tax rates.

The bursting of the property bubble and the slump in construction jobs may well signal a different future for Ireland from its boom times. Will the Irish government be able to resist the temptation to increase corporation tax rates…just a little…to soften the blow to the treasury of all those unemployed former boom town builders who now live off state benefits?

If they can’t resist, it will ensure that the recession becomes deeper and more profound as the very foundation of the Irish boom, well paying high tech jobs from large US tech companies, shifts from rock to quicksand…just as Latvia welcomes Microsoft and Google executives with open arms, keen workers and empty wallets.

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Tags: Bank of Ireland, Construction, Financial Services, Housing, Ireland, Manufacturing, Service Sector