Effects of the absence of mortgages
Not so far away from my house in the Cocody municipality of Abidjan, there is this:
This is a house that was built in 2007, and has stood empty since then. What’s happened is that someone signed a contract with the building society to pay the full value of the house bit by bit in tranches. Since mortgages are uncommon and very difficult to obtain, houses are usually bought this way, and the buyer doesn’t get access to the house until the full amount is paid. In this case for some reason or another, the buyer has run out of money and has not yet been able to make the full payment. No one else can take it over either, since the buyer’s partial payment and claim on the house is still valid.
This is quite a common sight in newly built areas in Abidjan, and fortunately it doesn’t have the effect of depressing prices in the entire neighbourhood, like for example foreclosures in the US.
Too easy money
Interestingly, the opposite financial condition, ie when it’s very easy to obtain mortgages and real estate related debt, can have exactly the same effect. Here’s a so called ghost estate in Ireland:
Easy credit, a housing boom and a belief that house prices always go up, caused otherwise non-viable developments to be built. When the boom ended, developers ran out of money, and abandoned half-finished houses. Unlike the empty houses in Abidjan though, some of the Irish ones could be razed without ever being inhabited.