It was billed as the biggest ever property auction in the State by reference to the number of lots on offer – 112 – and on the day 108 were available with four withdrawn. And of the 108, a total of 96 sold for €11.4m in the auction itself, and apparently another three sold after the auction. According to my calculations, there was an 89% success rate which still places Allsop Space as No 1 in Ireland; and considering the number of lots sold and Allsop Space is now the dominant leader in Irish property auctions. The actual results from yesterday’s auction are here. This is the analysis.
Prices and declines from peak: This analysis needs a big health warning because we don’t yet have a publicly-available register of property sales prices in Ireland – the latest is that with the recent passage of the Property Services Regulation Bill, we may get a register by next June 2012 which will have a history going back two years to 2010. And because we don’t have a register of sale prices, it is difficult to estimate the declines from the Irish residential property peak which was in 2007 (when exactly depends on type of property and location). We know Liam Carroll was asking €290,000 for 1-bed apartments in his Castleforbes Square development in 2005 – two years before the peak – and yesterday 1-beds were selling for €124-130,000, a drop of 57% from 2005 prices. A buyer of a house in the Riverside estate in Oranmore who yesterday paid €92,000 at auction claimed that at peak the houses on the estate were selling for €240-280,000 so yesterday’s price would reflect a 62-67% drop, more if you factor in the reduction in stamp duty to 1% since last December 2010. My own tuppence worth is that “hammer” prices yesterday were 65-70% off peak settled prices and that prices were marginally down from the previous three auctions. The official index of mortgage transactions compiled by the CSO says that we are down 45% from peak.
Buyer interest: The Irish Times estimated that 1,600 people attended the auction yesterday and it certainly seemed the venue was packed, with overflows on stairs and ante-rooms. Allsop Space has yet to produce its analysis of catalogue downloads, viewings, domestic/foreign and cash/mortgage buyers as it has done for the first three auctions. But going by the experience of the first three auctions, you can expect 80%+ of transactions to be in cash and 90% of the buyers to be Irish.
Yields: As with declines from peak, there is a lot of judgment required in assessing yields. Apartments in Liam Carroll’s Castleforbes Square development appeared to generate prices reflecting 8-9% yields. A flat in Raheny sold at a 7% yield, as did a house in Clonee, Dublin. The Zam Zam Pizza shop with vacant apartment above it in Bundoran achieved a 20% yield but what will happen to the rent level when the lease is renewed/terminated? A unit in the Westgate Business Park likewise attracted a price which reflected a yield of 38% but apparently the tenant is paying a rent which reflects a 18% yield though again, how long will the tenancy last at that level? Flats in Wexford attracted prices reflecting 13% yields, and a flat in Ballina yielded 15% but you would have to ask what will happen to rent levels after Budget 2012 when Minister for Social Protection, Joan Burton is set to announce reductions in rent assistance level, particularly outside the capital, and you might further ask if these reductions will affect private rent levels. The most expensive property of the day on Pembroke Road in Ballsbridge sold for €630,000 reflecting a 14.6% yield. Most sales were of property with vacant possession or only partly rented.
Protests: the previous Allsop Space auction in September 2011 attracted an organised protest outside the Shelbourne hotel, with protesters angered at the reality and prospects of property being repossessed, and then sold off at these auctions; yesterday there were “several protesters” according to the Irish Independent.. According to the Irish Times there was a “low-key” protest by a group called Anti-Eviction Taskforce. Now these protests are likely to be a very sensitive issue for Allsop Space, and remember Ireland is still a country where a repossessed farm will only attract a €1 bid because of our painful history under occupation by the British, and that’s despite being an independent country for 90 years. Allsop is a British auctioning giant, and the optics of a British company selling repossessed Irish property also has the potential to wipe the shine off these auctions. Having said that, Allsop Space is at pains to point out that there is a mix of property now sold at these auctions, some repossessed and some sold under instruction of the owner – in fact Allsop Space would probably claim the auctions are no longer “distressed”. And the Allsop Space auctions are undoubtedly well-run with as much transparency as you could expect from this sales channel, and for that we have Allsop in particular to thank. In respect of repossessions, the view on here is that the Government needs to put in place a personal insolvency/bankruptcy system so that people with unbearable debts can hand over their assets and see their debts cancelled, and then get on with their lives, whilst those who are capable of repaying are allowed/required to do so. A proper insolvency regime will force banks to take a more pragmatic view – if you can declare bankruptcy and emerge blemish-free in 12 months then banks will consider long and hard before they repossess a property which will cost it 5% in insurance, maintenance in a year and will generally be sold in a distressed state (minus light fittings, kitchen, bathroom, internal doors, flooring, fireplaces, balustrades and banisters, consumer unit).
The next Allsop Space auction is scheduled to take place on 1st March 2012, with the catalogue scheduled to be made available on 4th February, 2012. If you can’t wait, then there is a large Osborne King auction in Belfast next Thursday 8th December – details here.
UPDATE: 2nd December, 2011. Commenter Dreaded_Estate has produced a most helpful spreadsheet which you can view here which compares the “hammer” price of properties on Wednesday at the Allsop Space auction, with the peak asking prices as monitored by IrishPropertyWatch.com. Robert Hoban, the Director of Auctions at Allsop Space LLP has commented that “over 30 lots had remote bidders from abroad, and 10 were successful in beating the domestic bidders. Initial surveys suggest as much as 40% of purchasers had finance arranged in one form or another”
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