45% of auction property in capital

Properties sold at auction are on average selling for 65% below peak asking prices, Central Bank research shows.

Wed, 10 Oct, 2012 - 01:00

Geoff Percival

The research, by economist Eoin O’Brien, studies the effect on the Irish property market of the Allsop auctions which have cropped up on a regular basis since early last year.

Mr O’Brien’s analysis also found the majority of sales at such auctions were cash sales, and Dublin- based properties achieved prices closer to original market asking prices than properties based outside the capital. The research also showed houses have achieved better prices than apartments at auction.

That said, there has been an even split — in terms of sales volumes — between houses and apartments, since the auctions began.

A little under half of the properties had a rental income associated with them, but the majority have been sold on behalf of a receiver or liquidator.

Nearly half — 45% — of all properties sold at auction, to date, have been located in Dublin. The report also suggested that rental yields achieved on the sold properties are above current market yields and at levels similar to those seen in the mid 1990s.

However, Mr O’Brien warned: “The auction data is not without its limitations.

“Principle among these is the sample size, which — while increasing over time — remains small at this stage. To put the number of residential properties sold at auction — approximately 400 — in context, over 14,000 mortgages were issued in 2011, according to data from the Irish Banking Federation. Caution, then, should be used in terms of generalising widely based on the auction results.”

He said since cash sales are dominating such auctions, there is a case for garnering greater information in order to get a fuller understanding of true market conditions.

“It has been suggested that, given the reduction in bank lending, cash sales may account for a significant portion of the market. If this is the case in Ireland, it raises the concern that a significant element of the market is being missed at present.”