Allsop Auction: 68% Discount from Bubble Prices

Dreaded_Estate

Without question the Allsop auction's have been a success. I think they provide a tiny bit of much needed transparency to a market where it is almost impossible to know what property sell for.

Much has been made of the properties selling for significantly over their asking prices, 36.1% according to NWL.
However I think the reserve price is fairly irrelevant what really matters is how far below bubble prices the properties are selling.

With that in mind I have tried to track through as many of the residential properties as possible to see if I can find an old asking price on IPW. In some cases the exact house is there from back in 2007/08, in other cases I have had to use a little bit of judgement and pick a similar house/apartment from the database and in others I cannot find any suitable match.

Overall I think I have managed to find a suitable price for 45 out of the 64 residential sales that went through in the auction, 70% by number but 80% of the acution by value sold.

Overall I think the prices the properties sold for was on average 68% below bubble prices.

I have uploaded the results to this google doc, if anyone spots any mistakes or links for more properties let me know and I can add them to the sheet.

The google doc
https://spreadsheets.google.com/spreadsheet/ccc?key=0AutgOtkznKxIdE16MWVWXzcyT1Y5Q2dxWWZMbWc2Tmc&hl=en_US

ei.sdraob

I find it incredible that some most of these properties were asking what they were asking back then, if there really is an illustration of the madness that has befallen the country this is it, but as I mentioned in parallel thread i still dont understand why and how some of these sold for what they did, is it a case of being carried away in an auction?

I think we need to note that this is a 68% drop between earlier asking prices and current sale prices, so therefore can this help us figure out what is the difference between current asking prices and current sales prices? The latest daft report predicts a 57% drop in asking prices, which presumably correlates with sales prices, but of course we dont have a sale price database

antiskeptic

ei.sdraob wrote: »

I think we need to note that this is a 68% drop between earlier asking prices and current sale prices, so therefore can this help us figure out what is the difference between current asking prices and current sales prices? The latest daft report predicts a 57% drop in asking prices, which presumably correlates with sales prices, but of course we dont have a sale price database

That same daft report outlines the way to view asking price/sales price. It suggests that you add 5% to the asking price for boomtime prices (sales prices exceeded asking) and that you remove 5% from the current asking price (sales prices are less than asking). It's not precise but it would be safe to say that until the very peak, folk were getting more than asking.

So, add another 5% onto those boomtime prices and you've perhaps got a decent comparison

Dreaded_Estate

antiskeptic wrote: »

That same daft report outlines the way to view asking price/sales price. It suggests that you add 5% to the asking price for boomtime prices (sales prices exceeded asking) and that you remove 5% from the current asking price (sales prices are less than asking). It's not precise but it would be safe to say that until the very peak, folk were getting more than asking.

So, add another 5% onto those boomtime prices and you've perhaps got a decent comparison

Looking at current asking prices of similar properties would suggest that you may need to deduct 10% to 15% from current asking prices to get to sales prices.

Slydice

Seems to be a big discussion about this on the irish economy blog.

I found this comment conversation pretty interesting:
http://www.irisheconomy.ie/index.php/2011/07/11/allsop-auction-price-declines/#comment-156300

Jagdip Singh wrote:

July 11th, 2011 at 1:22 pm

Without meaning to catastrophise, remember that the stress tests on our banks back in March anticipated 55-60% falls from peak on residential property. 60% was the adverse scenario.

Of course Dreaded_Estate’s analysis is between asking and settled, though the asking prices are “late 2007″ which might be perhaps 6-9 months after the peak. And as Karl says, there are potential issues with sample size and the nature of the Allsop/Space auction.

What would a 68% or 80% decline in residential prices mean for the €24bn capital requirement. Another €10bn?

http://www.irisheconomy.ie/index.php/2011/07/11/allsop-auction-price-declines/#comment-156303

Joseph Ryan wrote:

July 11th, 2011 at 1:42 pm

@Jadgip

“What would a 68% or 80% decline in residential prices mean for the €24bn capital requirement. Another €10bn?”

€10 billion would hardly cover it. The total book loan value of the covered banks was €312 billion as per S Coffey presentation:
http://economic-incentives.blogspot.com/2011/06/presentation-irelands-public-debt.html
If the asset values underlying most of those loans have now dropped by 20% more that the strees tests allowed for, then the implications would certainly not stop at €10 billion. Probably closer to €50 billion.

Highlighting in bold by me