Bids Start at $28,000 for Irish Properties as Creditors Head for the Exits
Irish homes may sell for as little as 21,000 euros ($28,000) today as owners dispose of foreclosed properties in the country’s biggest residential auction.
Houses on sale by Dublin-based broker Space and the U.K.’s Allsop LLP include a four-bedroom log cabin on Lough Sillian, a lake northwest of Dublin, for a minimum price of 50,000 euros. A nursing home and a two-story property across from the U.S. Embassy in Dublin will also be put on the block.
“The Allsop auctions are really the only mechanism we have now for the revelation of prices, because transactions outside of them are so thin on the ground,” said Constantin Gurdgiev, a lecturer in finance at Trinity College Dublin.
Of the 110 properties in the public auction, 81 are being sold by creditor-appointed receivers and about 45 have rent- paying tenants, according to Space. More than 6,000 people attended the three auctions held since April, purchasing 93 percent of the homes being offered, the broker said.
“Nobody is a mug, nobody is looking to pay too much and everybody wants to really feel they are getting a bargain,” said Stephen McCarthy, managing director of Space. “Contrary to what people want to think, Irish people are still obsessed with owning property.”
As of 1:55 p.m., 45 of the 51 properties put up for sale so far had been sold, according to Space, which is holding the event at Dublin’s five-star Shelbourne Hotel.
The average asking price for a home in Ireland was 195,000 euros in the third quarter, compared with 366,000 euros during the height of the property boom in mid-2007, according to Daft.ie, Ireland’s largest property website. The central bank estimated in March that prices may fall as much as 60 percent from their peak. While properties in the city of Dublin may regain close to half their highest values, homes built in commuter towns in Ireland’s midlands may fall as much as 90 percent, Gurdgiev said.
The least expensive house being auctioned is a three- bedroom duplex in Donegal County with tenants under contract for almost five years at a rent of 50 euros a week. The minimum bid is 21,000 euros. The highest reserve in for a residence is 420,000 euros for a 19th-century house in Dublin’s Rathgar district arranged into eight self-contained residential units.
The average home price in Donegal county was 154,229 euros in the third quarter. In Cavan, where the log cabin is for sale, the average is 153,155 euros.
Burden for Banks
Irish banks hurt by the country’s real-estate slump will see their assets become even less valuable because of rising mortgage arrears and falling property prices, Moody’s Investors Service said Nov. 21. At the end of the third quarter, 8.1 percent of private residential mortgages were in arrears for more than 90 days, according to Ireland’s central bank. That compared with 7.2 percent at the end of June.
The Dublin-based Economic & Social Research Institute cut its growth forecast today for Ireland’s gross domestic product to 0.9 percent for next year from 2.3 percent, saying it expects further declines in house prices.
Ireland’s National Asset Management Agency, set up to purge lenders of risky properties, hasn’t taken part in the auctions, McCarthy said. Receivers appointed by Irish and foreign banks are taking part in the auction, according to Space.
“A lot of it is mattress money from Ireland,” he said, referring to the buyers. “But it is being repatriated to the U.K., because there are U.K. and foreign banks selling.”
The average price of the 179 houses and apartments sold in the past three auctions was 175,331 euros, McCarthy said.
The most expensive home auctioned so far was on Ailesbury Road in Dublin, one of Ireland’s priciest streets. It was bought for 2.3 million euros, 60 percent above the minimum price.
After selling 214 properties for more than 40 million euros in three auctions since April, Allsop and Space plan five more next year.
“If you want to sell it quickly, if you want to sell it in a transparent way, and you want to get paid in 30 days, there is no other way,” McCarthy said.
To contact the reporter on this story: Finbarr Flynn in Dublin at email@example.com.