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Auction prices show 65pc drop from boom

Tuesday, October 09 12:16:34

A new research paper from the Central Bank this morning found that properties at auction sold, on average, for 65pc below peak asking prices.

The analysis also shows Dublin properties achieved auction prices closer to market asking prices than properties outside of Dublin, while houses achieved relatively better prices than apartments.

Rental yields achieved on the properties sold at auction are above current market yields and at levels similar to those seen in the mid-1990s, it found.

In terms of finance, the majority of sales at the auctions were cash sales - supporting the case for greater information on this element of the market.

The study covered residential property auctions conducted over the last eighteen months.

It cautions that, because of the depressed state of the property market, its sample covered only 400 residential property sales.

It found that approximately 45 per cent (183 properties) were located in Dublin, where there was an even split between apartments and houses.

The majority of properties (260) have been sold on behalf of a receiver or liquidator and a little under half of the properties had a rental income associated with them.

Looking at prices fetched at the auctions it found that various price indices show falls from peak in the region of 50 per cent as of Q2 2012: the CSO residential property price index shows a 50 per cent fall, the Daft.ie asking price index shows a 55 per cent fall and Myhome.ie property barometer is down 49 per cent.

"Another aspect of the auction data which may be interesting to look at in terms of the fall in house prices is the maximum reserve. The maximum reserve provides an indication as to the price that sellers are willing to accept in the current market; although other factors may also impact on the reserve price (e.g. auctioneers may use the reserve price as a marketing tool, setting it low in order to generate interest in a property). On average, the maximum reserve price was set at 25 per cent of the peak asking price, indicating that sellers are willing to transact at prices up to 75 per cent below these peak levels," it found.