EDITORIAL : THE INDEPENDENT, IRELAND

 

Finally -- property prices we can trust

Yesterday's brisk bidding at the auction of distressed properties held in Dublin's Shelbourne Hotel showed that, despite all of the gloom and doom, there is significant pent-up demand from buyers, but only at the right price. Since prices peaked in early 2007, house and apartment prices have fallen by at least 50pc.

The value of commercial property and development land has fallen even more steeply. Unfortunately, this new reality has been slow to dawn on sellers, many of whom still continue to quote asking prices that hark back to the heady days of 2006 and 2007. With entirely predictable results.

The property websites are chock-full of properties that have been on the market for six, 12 or even 18 months. Matters have been made even worse by the absence of a centralised property registry, which could provide buyers with up-to-date information on the prices at which properties are actually selling rather than estate agents' puff.

The absence of price transparency has made things even worse for the property market than they need to be. Buyers, rightly distrusting the asking prices being quoted by sellers and their agents, are terrified of splashing out. After all, who wants to buy something today only to subsequently find that, if they had waited, they could have got the same property for much less six or 12 months later?

What are urgently required in the property market are credible prices that buyers can trust. This is why auctions such as those which took place yesterday serve such a valuable function. Even those who didn't buy yesterday can use the prices the houses and apartments sold for as a realistic guide when making an offer for comparable properties.

Something similar needs to happen in the commercial and development property market. Ever since the Government announced its plans for NAMA two years ago, the market has been frozen. Banks and property developers have been too scared to mark down selling prices for fear of the possible consequences when the loans secured against those assets were transferred to NAMA.

Now NAMA seems to be forcing the pace of events. This week it appointed a receiver to nine properties owned by Derek Quinlan. This follows the appointment of a receiver to several properties owned by developer Paddy Kelly last month.

This is a long overdue development. The appointment of a receiver means that these properties will quickly come onto the market. It is understood that Finance Minister Michael Noonan is anxious that NAMA starts selling properties owned by insolvent builders and developers soon. By doing so, realistic price levels can be established and buyers, confident that the prices being quoted are genuine, can be coaxed back into the market.

Of course, having to slash your price is never a pleasant experience for any seller, big or small. No-one likes to have to sell at a loss. In an ideal world sellers would prefer to hang on until prices somehow recovered. Unfortunately, that's not how the world works. It is only when properties start to come on to the market at prices that buyers can trust will the market begin to recover.

Lucky 13 for punters

The news from UK bookie Ladbrokes that it had suffered "unprecedented" losses in this country due to the record 13 Irish winners at last month's National Hunt Festival at Cheltenham will have brought a smile to the lips of punters everywhere.
All punters dream of beating the bookie, something which only happens rarely. Last month's Cheltenham Festival was one of those rare occasions. As one Irish winner after another passed the post, patriotic punters took Ladbrokes to the cleaners.
And the word on the street is that Irish punters' Cheltenham winning streak wasn't confined to Ladbrokes. Most of the other bookies operating in this market were also clobbered. Just for once the normal terms of gambling trade were reversed, with punters pocketing the bookie's money rather than vice versa.
Punters should enjoy their good fortune while it lasts. It mightn't be a good idea to bet on this run of good luck continuing indefinitely.
Sooner rather than later the balance of advantage will swing back to the bookies. It always does.