April 15th, 2011
08:15 PM GMT
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Irish houses sold at cut-price Friday in a massive auction that cleared out properties repossessed as the country’s financial crisis hit.

The auction in Dublin - seen as an example of the woes afflicting Ireland following the banking sector’s splurge on bad loans - proved prime pickings for bargain hunters.

Properties sold at a third of their peak price -– including a four-bedroom home in the prime area of Ballsbridge, Dublin 4. It went for €550,000 ($794,000), from a boom time estimate of between €1.5 million to €2 million. A three-bed penthouse flat in Dublin sold for €345,000 from a market peak of more than €900,000 – €1 million.

The auction, organized by Stephen McCarthy, managing director of Space Property in Dublin, in partnership with UK auction house Allsop, sold the properties on behalf of banks and receivers. McCarthy said another mass auction, twice as large, was being planned for early July.

Auctioneer Gary Murphy said the auction was a great success, with prices coming in higher than reserve due to high demand. The prices “could be very much seen as a turning point in the market for Ireland,” he added.

Gary McCarthy, managing director of Collins Stewart in Ireland, said the Ballsbridge property sale was “a bit of a reality check." McCarthy said the prices were skewed downwards because the sellers were largely banks. However it showed the “fire-sale level” of Ireland’s property market, which crashed with the demise of the Celtic Tiger economy around 2007.

Friday’s auction is a tiny example of the woes afflicting Ireland following the banking sector’s splurge on bad loans.

The country has taken a €85 billion bail-out package negotiated with the European Union and International Monetary Fund, as it tries to pull its economy out of the mire.

Despite the bail-out, rating agency Moody’s Investors Service cut Ireland's credit rating Friday to Baa3, a level just above junk. Moody’s cited the country’s decline in the Irish government’s financial strength, combined with its weaker economic growth.

The move shook confidence in the fragile euro-zone economies, which have been struggling with an ongoing debt crisis.

Ten-year bond yields for Ireland – which show the cost of the country’s borrowings – sat at 9.7% Friday, far above the 7% regarded as a sustainable benchmark.

Ten-year bond yields for Portugal - which paid back $6 billion in bond redemptions Friday but has said it is seeking a bail-out - were sitting at 8.9%. Ten-year bond yields for Greece, which accepted a bail-out last year, were sitting at 13.8%.

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