Property auction disaster shows prices still falling
IRELAND'S first discounted property auction proved a disaster yesterday, with just two of the 63 properties on offer being sold.
Only two separate plots of land sold for a total of €95,000 at the auction in a Cork hotel, despite the fact that over €10m worth of houses and properties were on offer.
Those same properties were worth almost €30m just five years ago. But yesterday potential bidders felt the prices were still too high.
Analysts grimly warned last night that it was proof the Irish market had still to reach rock bottom -- with potential buyers convinced that prices will fall back further.
Yesterday's auction was the first to involve discounted Irish properties. These are cut-price holdings being sold by private owners or developers eager to dispose of assets.
Ireland's first distressed-property auction took place in Dublin last April when €14.8m worth of deals were struck. Distressed property involves land or buildings being sold off at the direction of the National Asset Management Agency (NAMA) or court-appointed receivers.
A total of 65 discounted properties were listed by GMAC Auctioneers yesterday. One was sold before the auction and another was withdrawn from offer before the bidding began.
But 61 of the 63 properties offered had to be withdrawn by auctioneer Tom McCarthy after failing to reach their reserve price.
Almost 30 did not attract a single bid.
Post-auction negotiations were ongoing in relation to three properties last night.
In one case yesterday, a 1.75-acre site in Borris-in-Ossory in Co Laois attracted a single bid of just €4,000.
The two lots that were sold both involved plots in rural areas.
In Dun Chaoin, Dingle, Co Kerry, a one-acre field -- with startling views of the Blasket Islands -- sold for €26,000, €1,000 above the reserve price.
The land does not have planning permission but the purchaser -- a 35-year old from north Cork who did not want to be identified -- said he was pleased with the deal.
"I wouldn't say it was a bargain -- I thought I might get it for less than €20,000.
"But I am buying it as a long-term investment -- maybe for 10 to 15 years' time. This was what I came here for today," he said.
A local auctioneer said the price was a fair one for agricultural land in the area, which is close to the site where 'Ryan's Daughter' was filmed in 1969.
"The crucial thing about the site is that it doesn't have planning permission. If it had it would be a totally different thing," said Anthony Mac Gearailt of Mac Gearailt and Associates Auctioneers in Dingle.
Mr Mac Gearailt, noting that planning permission was not easy to get, said an acre site without permission would easily have achieved €90,000 to €100,000 in Dun Chaoin at the height of the boom.
Yesterday locals in nearby Kruger's pub in Dun Chaoin said the buyer had got "a bargain".
The only other property sold was a 10-acre field in Tullig, Leap, Co Cork, which fetched €69,000 -- €1,000 below the reserve -- after the vendor agreed to allow it be sold.
The land, which is zoned for horticultural use, fetched less than the average value for agricultural property.
One prospective bidder said yesterday's proceedings were "like watching a car crash in slow motion".
Several bidders had travelled from Dublin, Laois, Limerick and Galway. Around 150 people attended the event, which began at noon at the Radisson Hotel in Little Island --but by 2pm there were just over 60 left.
Tom Considine said he returned home empty-handed because he felt that values would decline still further.
"I think there is an expectation that prices still have further to drop," he said.
Francis Herlihy was interested in a property in Lusk, Co Dublin -- but opted not to invest.
"I believe the reserve prices are just too high -- it is as simple as that," he said.
GMAC auctioneer Tom McCarthy admitted he was "very disappointed" with the outcome and said he believed the reluctance of prospective buyers was due to liquidity problems in the market.
"We had expected better. There is an appetite amongst vendors for this type of sale. But we will have to go back and review what happened today.
"It will give you an indication of the state of the market -- it appears to be only people with cash that are in the market," he said.
First-time buyers either don't have the cash savings to make purchases -- or find it exceptionally difficult to secure the required finance.
"I think liquidity is a huge issue -- there were properties there that were for sale for less than their construction cost," he said.