An auction in D4 this week shows how far high-end property has fallen in value, writes Isabel Morton

LAST THURSDAY I enjoyed an outing to the offices of Bennetts, an estate agency in Sandymount, to attend the auction of a house on Claremont Road that had become a symbol of the bust.The prospect of witnessing a property selling under the hammer, perhaps within minutes, was positively exciting, at a time when house sales elsewhere are painfully slow, taking weeks, or even months of negotiations to get a result.

Auctions are such rare events these days compared with yesteryear – in 2005 and 2006, for instance, there were scores of them every week, and up to 1,700 a year.

This auction was somewhat different to others in that it had been the subject of a certain amount of media attention over the preceding weeks.

The sellers were property investors John Mara (son of former government press secretary PJ Mara) and his partner, Clare Murphy, who owe Irish Nationwide Building Society approximately €5.7 million.

They bought the house on Claremont Road in 2006 for €2.98 million and spent an estimated €1 million more on refurbishing it. They put it back on the market, in early 2007, at €5.5 million.

The house was then valued at €4 million and, based on that figure, Irish Nationwide advanced them a further €1.5 million to buy an investment property in Croatia, now said to be worth €2 million.

However, despite being on the market for the past two years, Chiang Mai in Sandymount failed to sell and finally the owners had no option but to offer it to the highest bidder, putting an AMV (advised minimum valuation) of €1.8 million on it – a long way short of the €5.5 million they had hoped to get for it back in 2007.

No doubt the sellers, like many other property investors, never thought they would see the day that their properties would drop in value at all, let alone by over 50 per cent in such a short period of time.

Auctions, which were once the preferred method of selling top quality properties and which regularly generated sales results that were well above expectations, had all but disappeared of late but might soon make a comeback as lending institutions force sales.

However, the atmosphere in Bennetts’s auction room last Thursday was not dissimilar to many other auctions I have attended over the years. The same nervous anticipation, meaningful glances, whispered instructions and reluctance to open the bidding.

The room was filled to capacity, with 30-odd seats occupied and at least another dozen standing with their backs to the rear wall (seasoned auction-goers favoured spot) or nervously floating about in close proximity to the door, mobiles at the ready.

Some, no doubt, were genuinely interested in purchasing the property but many (like myself) were there out of curiosity and to report on proceedings.

It was a well behaved auction, with one bidder graciously opening the bidding at €1.5 million and along with three other men in the room, the bids following with relative speed.

After a brief interlude for a consultation with the vendor, the auctioneer withdrew the property at €1.9 million and successfully negotiated a deal with the top bidder immediately after the auction. We can take an educated guess that the final figure probably did not exceed €2 million.

There was a vague feeling of anti-climax as people filed out of the room and down the stairs in relative silence.

There were no machismo Tony Soprano style deals being done, no back-slapping and certainly no sign of champagne corks being popped. If anything, there was a feeling of quiet relief all round.

Since then, however, it’s become the property gossip story of the week.

Neighbours were shocked to have it confirmed that, at best, their homes are now worth no more than 50 per cent of their top 2006 valuation.

And as this week’s Permanent Tsb price index shows, property prices are back to 2004 levels. Those who bought property since then must now be feeling green, if not downright terrified.

Spare a thought for those homeowners, who had been mortgage-free, but who were encouraged at the time to remortgage their homes based on what we now know were artificially high valuations, in order to buy investment properties or to help get their children on the property ladder.

A solicitor I met this week tells me that at least 60 per cent of his clients were in serious financial difficulties and that, as many of us are now “asset rich and cash poor”, it was only a matter of time before we fall like a house of cards.