Cash buyers move in for kill as property going cheap
CASH buyers are snapping up the majority of properties at auction, as they sell at prices 65pc lower than the peak of the housing market, a new study shows.
Experts said that distressed auction prices tend to be lower than those in the rest of the market because buyers are using cash and taking more risk.
Auctioned properties are going for prices 65pc lower than the peak of 2007, compared with a 50pc fall for the rest of the market, the Central Bank found.
And bargain-hunting buyers are generally paying with cash instead of relying on mortgages from banks.
The analysis of the Allsop Space auctions showed that Dublin properties achieved auction prices closer to market asking prices. However, houses and apartments outside of Dublin sold for less than the sellers were asking for, according to the study by economist Eoin O'Brien. Houses achieved relatively better prices than apartments.
The research, entitled 'Residential Property Auctions: What Do They Tell Us?' found that auction prices are also just over 20pc below current asking prices as compiled by the website Daft.ie.
The study took in 411 residential properties sold at seven Allsop Space auctions for a total of €52.6m.
Some 183 (45pc) were in Dublin. The majority (260) were sold on behalf of a receiver or liquidator.
The most recent Allsop Space auction was held in Dublin's Shelbourne Hotel a week ago and made €17.8m, with 110 properties successfully sold.
Meanwhile, Taoiseach Enda Kenny said AIB's move to hike its variable mortgage rate by 0.5pc for a second time in months was necessary to avoid the State having to put more money into the bank.
He acknowledged that the 0.5pc rise, announced last week, would be "difficult and challenging for people". But he said the return of the bank to a sound independent footing was of greater need.
Speaking in the Dail, Mr Kenny said although the increase would be difficult for the 70,000 affected mortgage holders, unless the bank was profitable it would ultimately result in 2.1 million taxpayers having to give it further support.
"This is a commercial decision by a bank that the Government considers to be a pillar bank," Mr Kenny said.