Geoff Whelan, of Buyers Broker Whelan (Dublin) has studied the UK auction market to give Irish buyers a sense of perspective but more importantly, to give buyers in Ireland some insight into what lies ahead in 2011 and 2012…

UK Auctions V’s Irish Auctions

In light of the 1st significant Irish property auction in recent times, it seems that for the next few years, auctions will probably become a reality for Irish property buyers. Irish buyers are however disadvantaged due to their inexperience in the workings of an auction. We can however look to the UK, indeed the company running the Irish auction was Allsop, a UK company and from the statistics below we can see those involved with the UK system get a lot more practice.

UK Auction Statistics for March

Auctions Held 133
Total Lots offered 2,756
Total Lots Sold 1,949
Sold % 70.7%
Total Realised £274,079,963 / €308,206,158

Recent Ireland Auction Statistics

Auctions Held 1
Total Lots offered 83
Total Lots Sold 78 – 4 sold since
Sold % 99%
Total Realised £13,336,235/ €15M

The Essential Information Group – monitor all activity in the UK property auction industry and publish details of auction activity on a national and regional basis. It’s a useful tool for those looking to participate in auctions.

I am trying to look at the UK auction results to extract some information that might be useful to Irish property buyers. The difficulty is that we don’t have comparable info of this side of the Irish Sea. Considering we are in the midst of a banking recession and a property crash, compared with the UK banking recession of which property is a casualty, we are moving through the process of clearing the market slower than the UK. This is largely due to the NAMA effect, whereby they need time to come to grips with their responsibilities and to take action. And the problem of individuals trying to hold on to assets at any cost.

On the UK results, David Sandeman of EI Group commented “March 2011 was in complete contrast to February 2011. Last month (Feb) saw falls across both the residential and commercial sector in both lots offered and sold, and in the amount raised. February however saw increases in the very same metrics, though percent sold was down in February but up in March. The real change in March came in the commercial sector where lots offered and sold were down 26% and amount raised down 52%. The residential sector saw a drop in lots sold of only 1.7% and total raised slipped only 0.9%.”
He offers a possible explanation “The improvement in sale rate and reduction in lots offered and amount raised would suggest that one of the factors could be auctioneers being more selective on the lots taken into auction and that the average lot size has fallen in the commercial sector”

In the last year the rate of successful sales of UK auction properties have moved between 52% – 71%. This shows that not every property at auction is considered a bargain. I believe potential Irish bidders will also come to recognise that just because we are in a downturn and prices are on the floor, you can still make bad investments. There seems to be an attitude that you can’t go wrong buying now. I believe that it is not the case, and Irish buyers of property and particularly investors need to stop looking at potential for capital appreciation and look at the income being produced by the property and its potential to continue to delivering that income.

This attitude may give us an explanation for the exuberance of buyers at the recent Allsop auction. While I’d like to see it, it will be of interest to see if these successes continue. Comparisons between the UK and Irish auctions results may then become more meaningful.
You can be sure that we at Buyers Broker will continue to provide comment. I’d like to thank the Essential Group for the details on the UK auctions.

~Geoff Whelan,
Buyers Broker Whelan, Trinity Street, Dublin 2.

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