Knockdown Irish property . . . .

Lyn256

http://www.thejournal.ie/knock-down-irish-property-auction-drawing-foreign-buyers-2011-02/


This looks very interesting. Will it set the benchmark for irish property for the coming years?

I heard the guy being interviewed about the auction on the lunchtime news and one point that he made was that the properties with sitting tenants will be priced in accordance to the rent generated.

Kosseegan

Lyn256 wrote: »

http://www.thejournal.ie/knock-down-irish-property-auction-drawing-foreign-buyers-2011-02/


This looks very interesting. Will it set the benchmark for irish property for the coming years?

I heard the guy being interviewed about the auction on the lunchtime news and one point that he made was that the properties with sitting tenants will be priced in accordance to the rent generated.

It is an auction. There is no pricing other than what buyers will pay. How does he know that every randome purchaser who turns up will bid based on rental yield? He is trying the age old trick of getting as many bidders in as possible by saying there will be bargains galore.

subway

dead cats will be bouncing out of that auction house

Victor

If you are considering taking part, be very careful as, once you have a winning bid on a property, you can't back out - the auctioneer becomes your agent and can sign if you don't. You will also be expected to have a deposit (probably 10%, bank transfer) on the day.

the groutch

Lyn256 wrote: »

This looks very interesting. Will it set the benchmark for irish property for the coming years?

I think you may be onto something, this is one of the few true measures of the state of the property market.
on a bigger scale, but a bit like on ebay, where you use the completed listings option to get an idea of what price to list at.

Idbatterim

Id be very very cautious if I was a foreign buyer who didn't know the market, if there is any sort of bargain, Im sure someone who knows the market here will be onto it! The crap hasn't really even hit the fan here yet!

OMD

Kosseegan wrote: »

It is an auction. There is no pricing other than what buyers will pay. How does he know that every randome purchaser who turns up will bid based on rental yield? He is trying the age old trick of getting as many bidders in as possible by saying there will be bargains galore.

The vendor simply sets a reserve price based on rental yield. Pretty standard for any auction. The bidder does not set the minimum price.

myflipflops

I didn't see this posted previously....

According to the below, the first auction of distressed property will happen on April 15th. As you can see below, reserve prices have been set at much lower than what current sellers are asking for similar properties.

Does anyone know any more about this? Will it be a standard auction open to all? It is a British auctioneers (www.allsop.co.uk/) running the auction so is it them who have valued the propeerties?

the auction would benefit the property trade by establishing a floor from which people could build

This line is very interesting. Will the value of these properties make EA and sellers realise the true market value of property?

http://www.irishtimes.com/newspaper/frontpage/2011/0304/1224291283180.html

irish Times wrote: »

ORNA MULCAHY and FRANCES O’ROURKE

PROPERTY OWNERS and auctioneers alike may well choke on their porridge this morning when they see that house prices have dropped even further overnight.

The news comes with the publication of the catalogue of Ireland’s first sale of distressed property to be held by British auctioneer Allsops, which specialises in selling properties held by banks, receivers and homeowners needing to sell quickly.

The cheapest property being put on the block is a two-bedroom tenanted apartment in Portlaoise with a top reserve of €35,000. A similar apartment in the same development, Bridle Walk, is listed for sale elsewhere at €170,000.

In Rathfarnham, a two-bedroom penthouse has a maximum reserve of €145,000 in the Allsops auction. A two-bedroom ground-floor unit in the same scheme is listed on myhome.ie for €275,000.

More than 80 properties in Dublin, Cork, Limerick and Galway will be offered at the auction in the Shelbourne Hotel on April 15th, which is being organised by Dublin estate agent Stephen McCarthy of Space, in alliance with Allsop, one of the largest auction houses in Britain.

Details will be available from both companies’ websites tomorrow morning.

Each property carries a maximum reserve price. However, according to McCarthy, the actual reserve prices may well be less on the day, depending on demand. However, the reserve set nearer or on the day will not exceed the published maximum reserves.

Details of properties seen by The Irish Times show these maximum reserves are well below current asking prices for similar homes.

A detached four-bedroom house on a large site in Churchtown, close to Milltown Golf Course, has a maximum reserve of €400,000 – less than three-bedroom homes are making nearby.

A large mews house on a laneway in Ballsbridge has a maximum reserve of €600,000. While there is no similar home for sale nearby, refurbished homes of a similar size in the neighbourhood have been trading around the €1 million mark.

In Temple Bar, a studio apartment on Essex Street has a maximum reserve of €80,000, a price likely to strike fear into the heart of investors with property in the area where slightly larger units trade for upwards of €140,000.

The prices are likely to shock estate agents trying to shift property in a dormant market. However, Mr McCarthy said the auction would benefit the property trade by establishing a floor from which people could build.

gurramok

"Studio apartment on Essex st with maximum reserve of 80k". Thats nothing special, most builds down there are tiny.

chicken fingers

A PR excercise, nothing more.

The artificial floor on the housing market is still being maintained. A test auction of some lowish-priced houses will do nothing.
When people start getting evicted and homes start being repossessed wholesale, and when banks finally realise that they need to sell those homes for whatever people will pay for them... THEN, then we will see the true "floor".

gonedrinking

gurramok wrote: »

"Studio apartment on Essex st with maximum reserve of 80k". Thats nothing special, most builds down there are tiny.

but thats the max, it will most likely go for a lot less than that

Mr Teb

I have worked for 25 years in the mortgage sector, All the replies that you see on this thread that will reflect this auction as a bad thing will be mainly from Auctioneers who have basically set the price they like over the last 10 years to the housing market. What is coming is going to surprise even them. Prices are going to drop lower than any economist has predicted so far.
To add some clarity on it as people have done above. Banks repossess properties. They will need to sell them and will drop there prices. Banks are generally willing to take a hit on a property as they know that prices are due to go further. This will reduce prices eventually in surrounding area's. If anyone would like to argue this I would love to hear there arguement.

Victor

gonedrinking wrote: »

but thats the max, it will most likely go for a lot less than that

No, its a maximum reserve. A reserve is the price below which a seller won't (or is unlikely to) sell.

The concept of a maximum reserve is novel, certainly in the Irish market.

WalterMitty

Dont beleive the yields they quote. Rents have a lot further to fall across the country.

subway

Victor wrote: »

No, its a maximum reserve. A reserve is the price below which a seller won't (or is unlikely to) sell.

The concept of a maximum reserve is novel, certainly in the Irish market.

its the maximum the reserve will be.
its a normal reserve but will be announced on the day at a price <= to the max

jetski

Mr Teb wrote: »

I have worked for 25 years in the mortgage sector, All the replies that you see on this thread that will reflect this auction as a bad thing will be mainly from Auctioneers who have basically set the price they like over the last 10 years to the housing market. What is coming is going to surprise even them. Prices are going to drop lower than any economist has predicted so far.
To add some clarity on it as people have done above. Banks repossess properties. They will need to sell them and will drop there prices. Banks are generally willing to take a hit on a property as they know that prices are due to go further. This will reduce prices eventually in surrounding area's. If anyone would like to argue this I would love to hear there arguement.

So working as a mortgage broker or what ever you do, you know more than every single economist in Ireland.... LOL

Obviously, its in the banks interest to get as high a price as possible for a property in every situation. lowering property prices exposes banks to risk as the house value is a security against the loan. One on the reasons banks have minimum mortgages.

@ WalterMitty (appropriate name btw) - I suggest you read this.

Mr. Loverman

jetski, aren't you the guy who has been consistently wrong about the housing market?

Snakeblood

jetski wrote: »

So working as a mortgage broker or what ever you do, you know more than every single economist in Ireland.... LOL

Obviously, its in the banks interest to get as high a price as possible for a property in every situation. lowering property prices exposes banks to risk as the house value is a security against the loan. One on the reasons banks have minimum mortgages.

@ WalterMitty (appropriate name btw) - I suggest you read this.

The market for rent is being artificially propped up by rent allowance. as soon as the new government decide to chop that and stop subsidising landlords. (and they will) rent will have to find a new floor.

beertons

I'm going to head up to the auction too see what it's like. Seen as it's the first of 4 such auctions, there may be more value at a later date. Although there are 2/3 houses we're interested in.

jimmyjim11

you can see what on offer here

gonedrinking

there doesn't seem to be any bargains there, unless the minimum reserve happens to be a lot lower than the max reserve stated, but given the hype around this auction closing bids are almost guaranteed to be at or very close to the max reserve price

WalterMitty

jetski wrote: »

So working as a mortgage broker or what ever you do, you know more than every single economist in Ireland.... LOL

Obviously, its in the banks interest to get as high a price as possible for a property in every situation. lowering property prices exposes banks to risk as the house value is a security against the loan. One on the reasons banks have minimum mortgages.

@ WalterMitty (appropriate name btw) - I suggest you read this.

So what , one months rise . Once rent supplement /allowence is cut a lot more by fiscal necessity and when all the empty homes around the country are finally inhabited, the amount of rent landlords will get, and the resultant price of proeties using investment metrics, will be much lower than the prices stated for this auction. SOunds to me like this estate agent is trying to flog apparently "fire sale " priced properties to a gullible UK market where they havent had as much house price falls as here and where property is still very expensive relative to average wages.

Less rent allowance from government = rents falling
More emmigration= less demand for rented properties =rents falling
More people buying currently empty houses in live in =less demand for rented properties=rents falling
More new investors buying cheap properties at low prices in coming years(not this auction IMO)= greater supply rentable properties=falling rents.

jetski

Mr. Loverman wrote: »

jetski, aren't you the guy who has been consistently wrong about the housing market?

can you give me a link to what your talking about?

Mr. Loverman

jetski wrote: »

can you give me a link to what your talking about?

Couldn't be bothered going through your old posts, but I'm pretty sure the regulars on this forum agree with me.

jetski

@ waltermitty + snakeblood I personally think the rent fluctuations are tied to the interest rates.

Treehouse72

jetski wrote: »

So working as a mortgage broker or what ever you do, you know more than every single economist in Ireland.... LOL

Why don't you tell us what "every single economist in Ireland" is saying?

WalterMitty

jetski wrote: »

@ waltermitty + snakeblood I personally think the rent fluctuations are tied to the interest rates.

What ? Are you saying landlords raise rents as interest rates are rising? If so you dont understand how markets function.

Chris_5339762

A lot of those properties are Investment Properties. I presume that means that there is a tenant in there and that you're just owning the property and becoming the landlord, essentially.

Graces7

Snakeblood wrote: »

The market for rent is being artificially propped up by rent allowance. as soon as the new government decide to chop that and stop subsidising landlords. (and they will) rent will have to find a new floor.

In the meantime what happens to the tenants living in rented accommodation who are already in poverty?

jetski

WalterMitty wrote: »

What ? Are you saying landlords raise rents as interest rates are rising? If so you dont understand how markets function.

LOL..... good man

liger

gonedrinking wrote: »

there doesn't seem to be any bargains there, unless the minimum reserve happens to be a lot lower than the max reserve stated, but given the hype around this auction closing bids are almost guaranteed to be at or very close to the max reserve price

The Bar in Arklow was listed at 1.2m in Sept 2010 in the indo. Max reserve now at 265k

The penthouse apt in Rathfarnham are listed max reserve of 145k. ( 2bed) There is one listed on My home at the moment for 285k ( 3 Bed ).


Depending on the interest in the room on the day i'd say people might get a good deal.

Jesus Wept

They look piss poor value. A few more photos might help (though not them perhaps).
Can't see a one bed in D8 getting 950pm rent either.

Snakeblood

Graces7 wrote: »

In the meantime what happens to the tenants living in rented accommodation who are already in poverty?

They'll tell their landlord that they can't pay the rent as the rent allowance is dropped. Some landlords will accomodate them by cutting the rent and some won't. Then they move out if they have to, and find somewhere new to live that's within what they can afford. Which might not be too different as rent will have found a new floor, and landlords will have to adjust to the new reality if they want to rent their property.

It's tough that people have to move, but they in all likelihood will find somewhere to live, and everyone will be better off apart from the Landlords, who were in receipt of a stipend from the government despite not producing anything.

Lyn256

Properties are now on daft

http://www.daft.ie/allsopspace/

The Rooster

I went to a viewing of some of the Dublin apartments on this list. What surprised me was the positiviety of other viewers. They reckon these are real bargains, but that the final auction prices will exceed the maximum reserves.

It will certainly be interesting to see what happens on auction day. If most sell, it'll be a decent indicator of the floor. If most don't, then it'll be anybody's guess where the floor will end up.

super_furry

Isn't this 'maximum reserve' thing a massive red hearing? It's still a reserve bellow which the property will not be sold and they're getting a hell of a lot of free publicity off the back of it, when in reality there's very little difference between this and any other property auciton.

Treehouse72

The Rooster wrote: »

If most sell, it'll be a decent indicator of the floor. If most don't, then it'll be anybody's guess where the floor will end up.

The Irish Central bank already have a firm opinion on this matter.

The Rooster

super_furry wrote: »

Isn't this 'maximum reserve' thing a massive red hearing? It's still a reserve bellow which the property will not be sold and they're getting a hell of a lot of free publicity off the back of it, when in reality there's very little difference between this and any other property auciton.

Well, a lot of auctions don't let you know what the reserve is (sometimes the auctioneer will announce there'll definitely be a sale now, when the bidding has breached the reserve).

In this case, they are not going to announce the actual reserve either, but as they say in the blurb, the benefit of announcing a max reserve is that you know if you are the highest bidder and you've reached the max reserve, you definitely win. And the max reserves are pitched quite low. Whether low enough is for each individual to decide, but regarding the Dublin apartments they are roughly at 50% of what the asking price was for those apartments previously. And they seem to be pitched a good bit lower than most other apartments you'll find on daft.ie, etc.

84 properties is a very big auction, so it deserves the publicity IMO. There will be no pre-auction sales, so the really good thing is we'll all get to see exactly how much each property is sold for (and also we'll know which properties didnt get sufficient bids to make a sale).

djmcr

jetski wrote: »

@ WalterMitty (appropriate name btw) - I suggest you read this.

Daft.ie report based on asking rents only

Mr. Loverman

The Rooster wrote: »

What surprised me was the positiviety of other viewers. They reckon these are real bargains

As they say, there's one born every minute...

Idbatterim

these idiots reckon that the "maximum reserve" is a bargain? lets see what they actually go for, and when they do sell, god knows what you may pick them up for in a year or two! I wonder are these potential "canny investors" the same ones who paid roughly 500k for a 2 bed in the likes of Sandyford, Dundrum or city centre not too long ago! Id say alot of people just cant hold their nerve and wait, the more that do this, the more prices will drop, opposite of what happened on way up with prices... Their fantastic logic no doubt, is that it used to cost X, it now costs less at Y, why it must be a bargain...

Snakeblood

The Rooster wrote: »

I went to a viewing of some of the Dublin apartments on this list. What surprised me was the positiviety of other viewers. They reckon these are real bargains, but that the final auction prices will exceed the maximum reserves.

It will certainly be interesting to see what happens on auction day. If most sell, it'll be a decent indicator of the floor. If most don't, then it'll be anybody's guess where the floor will end up.

I don't think that it'll indicate the floor in the current circumstances. Things are getting worse, not better, and prices will continue to slide until nama implodes or explodes or whatever it's going to do. The uncertainty is going to remain.

Theboinkmaster

Snakeblood wrote: »

I don't think that it'll indicate the floor in the current circumstances. Things are getting worse, not better, and prices will continue to slide until nama implodes or explodes or whatever it's going to do. The uncertainty is going to remain.

I agree - we're nowhere near the 'floor' and whatever these sell at is irrelevant to this.

scobysnacks

Having lived in Australia for the last four years I can confirm that Ireland is way cheaper in every way especially rent and house prices. I was paying $2,000 a month for a crappy two bed unit in a Sydney getto and it was considered a bargain (50 people applied for the same place). Costs for a similar place in Bondi beach (quite a few roads back from any sea view) were in the region of $700 per week!

Ireland is supost to be a first world country but the house prices are now similar to Brazil (where they earn a third of what Irish do and have interest rates of 17% on a mortgage). I've also seen house prices in Thailand that cost a lot more then Dublin.

I've heard people saying 150k is too much for a three bedroom house in an OK area in Dublin. No builder can produce a property for that price. So what do people think the floor will actually be? 10k for a house? Is Ireland back in the third world? I know we got ripped off in the past but now Ireland is a bargain basement. Surely with the mentality of wanting everything for nothing is not a good thing. How can we ever pull ourselves out of recession with that attitude?

gurramok

scobysnacks wrote: »

Having lived in Australia for the last four years I can confirm that Ireland is way cheaper in every way especially rent and house prices. I was paying $2,000 a month for a crappy two bed unit in a Sydney getto and it was considered a bargain (50 people applied for the same place). Costs for a similar place in Bondi beach (quite a few roads back from any sea view) were in the region of $700 per week!

Ireland is supost to be a first world country but the house prices are now similar to Brazil (where they earn a third of what Irish do and have interest rates of 17% on a mortgage). I've also seen house prices in Thailand that cost a lot more then Dublin.

I've heard people saying 150k is too much for a three bedroom house in an OK area in Dublin. No builder can produce a property for that price. So what do people think the floor will actually be? 10k for a house? Is Ireland back in the third world? I know we got ripped off in the past but now Ireland is a bargain basement. Surely with the mentality of wanting everything for nothing is not a good thing. How can we ever pull ourselves out of recession with that attitude?

Show us some stats and links. Dublin is not comparable to Sydney where the latter is a major world city.

Where are these 'cheap rents and house prices' in this 'bargain basement' of Dublin?

Kamellia

@scobysnacks
Are you being sarcastic? Put it this way. I'm on 37k a year (distinctly average). If I had a mortgage of 150k over 30 years and interest rates were at your Brazilian rate of 17%, my repayments would be 2138euro per month - that's almost my entire take-home pay after tax! (Figures based on Karl's Mortgage Calculator http://www.drcalculator.com/mortgage/ie/) Even if interest rates reached 10% here (quite possible), my repayments would still be 1316euro per month, which personally, would be over the limit of affordability for me.

Going back on topic - presumably the prospective buyers at this auction will already have finance in place (cash or mortgage approval) if they are to place bids on any of the property for sale here? Otherwise, the winning bidder may find later down the line that they can't get mortgage approval (as is the case for many buyers today), the sale falls through and the property is back on the line again. This must be a contributing factor in the final outcome of this auction.

The Rooster

Kamellia wrote: »

@scobysnacks
Presumably the prospective buyers at this auction will already have finance in place (cash or mortgage approval) if they are to place bids on any of the property for sale here? Otherwise, the winning bidder may find later down the line that they can't get mortgage approval (as is the case for many buyers today), the sale falls through and the property is back on the line again. This must be a contributing factor in the final outcome of this auction.

You need to have finance in place before you bid. You cannot bid "subject to mortgage approval" or "subject to contract" or "subject to survey". When the hammer falls you own the property and, for example, its your obligation to insure it from that moment.

10% of the funds are paid over on the day and the balance has to be paid within something like 5 weeks I think.

Interesting to hear the almost overwhelming negativity on this thread about the auction. Have people got an opinion on how low would prices have to go before there is value, or are people not even looking at the prices but just have the view that prices have to still go down?

The Dublin apartments on show certainly arent prime location. They're Dublin 1 and Dublin 8, but still a short walk to city centre. The maximum reserves are€100k for 1 beds and €120k-€140k for 2 beds. All come furnished and with one parking space I believe. About half have sitting tenants on one year leases with annual rents of about €9k for 1 bed and €11k or €12k for 2 beds, as far as I remember. Service/mgt charges are in the region of €1500 I believe.

scobysnacks

This is a good site to compare costs of living.

www.numbeo.com

My husbands city which is Porto Alegre in Brazil is a good example. It's the same size as Dublin, not a major city. In fact not even a capital city, although food is cheaper, which is to be expected given that we have to import a lot, clothes are way more expensive and property is a little more too, given the average wage.

That is true about Brazilian interest rates, hence why most people rent. Also they slap 70% - 100% on imports. Laptops and electronics cost twice as much as Ireland so they have to pay for everything over ten months.

Yes, we are more expensive in some things, but we earn a lot more. If you want our wages to half (which they will if people continue to stop buying) then yes prices will drop but given our wages, the prices are normal.

When I went to Sydney I had to take a drop in wages and only after four years was earning the same as I was in Dublin but I was paying twice as much for everything for example:

2 litres of milk $5
12 eggs $4
Loaf of bread $5
Bus ticket city to Bondi $3.20
Taxi - same distance as Dublin 2 - 4 $40
Glass of wine $10 -$12
Cocktails - $17
Meal for two in cheapo Asian place ,( no drinks, 2 mains and starter to share )- $60
Flights to Dublin with Eithad $2,600, same flight from Dublin to Sydney costs 1,000 Euro

Check out this website to get idea of the rents. That's just a guide as usually you have to offer the landlord more to secure the unit. Just bare in mind that the $300 a week places would be absolute cockroach and mould infested kips that you couldn't swing a cat in.

http://www.domain.com.au/Search/rent/State/NSW/Area/Eastern-Suburbs/Suburb/Bondi-Beach/?ssubs=1&bedrooms=1

I went out for dinner in Dublin to an amazing French restaurant, had two courses including Duck with great French wine for 30 Euro. I couldn't believe it. The quality of the food, the price and service were outstanding. I could never have afforded that in Sydney. It would have set me back at least $100 but probably more.

I also went to a pub in central Dublin, a nice one too, where all the beers and cocktails were a fiver. That was a Saturday night.

Sorry guys but if nobody gets off their backside and starts spending and supporting Irish businesses we will never recover.

super_furry

Interesting that you mention Australia as I, and many others, believe that right now they’re in the exact same place as we were in 2007.

http://en.wikipedia.org/wiki/Australian_property_bubble

scobysnacks

Property prices are less than 20% overvalued at the moment. In fact compare to most countries Irish people are currently emigrating to such as Canada, the UK, NZ and Australia we are affordable:

http://www.economist.com/node/18285595

Interestingly so, there is lots of press in Australia about how the bubble will never burst..... in fact the press very similar to Ireland around 2007 (low unemployment, low interest rates etc). My Australian friends are paying around $800,000 - $900,000 for their first apartment on interest rates of 8 %.... it's crazy

Idbatterim

Syndney is not a major world city! what the deal with massive prices there? same as here probably, not enough land! Were a regular hong kong here!