Here’s our property auction market round-up for Q3 2016:
In a market fraught with political and economic uncertainty following the EU referendum, property auction activity slowed in July, which is usually a busy time for the industry, according to the Essential Information Group (EIG).
Across the UK, the number of lots fell by 6% when compared with July 2015, while 11% fewer lots sold and the total amount raised was down 17%.
The number of lots offered in the residential auction sector fell by 7%, with £326m raised – down from £348m the previous year – while the volume of lots sold dropped by 13%, with the success rate dipping from 76% to 72%.
In the commercial sector, 803 lots were offered, which was marginally higher than the 797 available to buy in July 2015, but the number of lots sold dropped by 3%, from 78% to 75% when compared with last year, while the total raised fell significantly from £208m in July 2015 to £164m this year.
In July, the highest total raised at auction was in London at £278m, down by 17% year-on-year.
The lowest total raised was in Northern Ireland - £9m, which was down from £12m in July 2015.
The highest number of lots offered was in the North West (1,485), up by 3% on last year's figure, while the 287 lots offered in Scotland was the lowest number offered that month.
The North West also clocked up the highest number of lots sold in July (1,073), with Northern Ireland recording the lowest figure at 120 – down 28%.
East Anglia recorded the highest success rate at an impressive 83%, up by 4% in the last year.
The lowest proportion of lots sold was in Northern Ireland at just 42%, down by almost a third when compared to July 2015.
Strettons raised close to £6.8m at its July sale, but the auction highlighted the fact that there was much market uncertainty resulting from the EU referendum, with ‘an air of caution’ among bidders in the room.
The highest price of the day was achieved on a property in Roman Road, E3, with planning for six flats and a commercial unit which sold for £1.31m against a guide of £950,000 plus.
This was followed by a site in the Birmingham Jewellery Quarter which sold for £900,000.
Other highlights of the sale included a derelict manor house on 13½ acres near Coventry which was guided to sell at £150,000 and didn’t disappoint with a hammer price of £450,000.
A freehold restaurant with flat above and an adjoining house in Roydon, Herts, producing £51,000pa sold for £675,000, showing in an initial gross yield of 7.56%.
Commenting on the sale, Strettons’ director Philip Waterfield (left) said: “Although the catalogue, which came out before the Brexit vote, was smaller than usual, the room was busy. However, there was an air of caution highlighted by the more limited interest in the less traditional lots which a month or so ago would have grabbed buyers’ attention.
“Our traditional hardcore of north east London properties in Stratford, Edmonton, Leytonstone and Essex sold well as did a selection of residential properties in Thornton Heath, Surbiton, Forest Hill and Mottingham.”
The Brexit vote did not deter many of the buyers who attended Romans’ fourth auction of the year at the Green Park Conference Centre in Reading.
There was fierce bidding on a varied catalogue of properties and land which resulted in 80% of the lots being sold on the day; many for prices significantly higher than their price guides.
One passionate buyer even got up from his seat during a bout of very competitive bidding so that the auctioneer could see him better.
“We were unsure how the sale would unfold, being so soon after the EU referendum, however as I offered the first lot it became very obvious that people had come to buy and were not just here to window shop,” said Simon Clayton (right), Romans’ auctions director.
“There has been a lot of talk in the press about prices softening and some nervousness in the market, but we didn’t experience that today. In fact the demand seems to be stronger than ever, it was very much business as usual.
“It’s all about supply and demand and the market is currently short of stock.
"Shrewd investors are not taking the risk of waiting to see if prices fall and can see the benefit of playing the long game.”
Popular lots included a mid-terraced house in Toll Gardens in Bracknell. The property does require modernisation yet it still sold for £94,000 above its guide price.
In Aldershot, on St Georges Road, a period terraced house requiring significant renovation sold for £247,000 from a guide price of £150,000.
Another sought-after property offering great potential for improvement and extension was a vacant, period, semi-detached house on Wimbourne Avenue in Banbury which sold for £202,000.
No fewer than 158 of the 214 lots offered for sale were snapped up by investors, including post-auction sales – 74% sales success – at Allsop’s residential auction on 20 July, which was held at the Cumberland Hotel in London, raising £51.2m.
A total of 17 lots were sold for more than £1m, including Grade I listed Bere Court in Pangbourne, Berkshire, which sold for £2.15m.
Overseas buyers were very active at the auction, as illustrated by an overseas developer which paid £4.2m for a vacant pair of mixed use buildings with planning permission to partially demolish and redevelop to create two shops and eight flats.
Auctioneer Gary Murphy (left) commented: “As the first major residential auction post-Brexit, it was important that our sale demonstrated continued confidence in property. Auctions are a good barometer of the market and buyers are keen to get on with business. In fact, bidding was often as heated as the weather, as bidders and observers filled the room and escaped the heat wave outside.”
“Investors remain keen to invest and we experienced significant depth of demand for long-term opportunities. Development sites or buildings with consent for residential conversion drew particularly strong competition from UK and overseas bidders.”
There was a ‘surprising’ increase in the number of properties offered and sold under the hammer in August, otherwise traditionally a quiet period in the property auction market.
Data from the EIG shows that in the 48 auctions held across the UK last month, the volume of lots rose by 15% when compared with August 2015, while 20% more lots were sold with the total amount raised also up 20% to £62m.
In the residential market, lots offered increased by 15% in August, from 763 lots to 880 lots, whilst lots sold increased 18% from 517 lots to 609 lots and the amount raised gained £9m to total £57m.
The recent market falls prior to August had an adverse impact on the rolling quarterly figures, which were down in all four of the metrics measured by EIG, but the rolling yearly figures still showed increases on the previous year – notably the 10% rise in the amount raised.
The commercial market made large gains in August, with double-digit rises in all four metrics, but we could not read too much into the surge given the very small sample size that was being reported on.
“The traditionally quiet month of August has yielded a surprisingly positive set of auction results,” said EIG’s David Sandeman (right).
He added: “Whilst one swallow doesn’t make a summer, especially given the much smaller than average sample set, the industry will certainly welcome the increased activity and approach the busy Autumn period ahead with renewed confidence.”
SDL Graham Penny
SDL Graham Penny experienced its busiest Leicester auction room of the year in August as it held its fourth city auction of 2016.
The auction, which took place on Thursday 11th August at the King Power Stadium, saw a catalogue of 24 residential, commercial, mixed-use and development land lots go under the hammer with more than £1.5m in sales raised for vendor clients.
Andrew Parker (below), auctioneer and managing director SDL Graham Penny, commented: “It was excellent to see such competitive bidding at the auction this month. There were bidding cards raised across the auction room along with internet bids, proxy bids and telephone bids.
“We frequently receive interest in our lots from outside of the East Midlands which is why we offer several means of remote bidding to ensure the best price is achieved for our clients in the auction room, and we certainly did that this month.”
Among the lots selling well in the auction room was a four-bedroom bungalow in Oadby which sold for £231,000 against a guide price of £200,000, a three-bedroom terrace property requiring further improvements which sold for £116,000 from a guide price of £95,000, and a two-bedroom apartment which would make a good buy-to-let opportunity and sold for £59,000 from a guide price of £50,000.
Auction House reported a busy and profitable August, with a success rate of 82% - a full five percentage points ahead of 2015’s figure of 77% - and a month which included the sale of the group’s 2,000th property this year.
The franchise business held seven sales across the country, selling 113 lots from 137 offered, and raising a total of £12m. Cumulative results were ahead of last year; sales in the first eight months of 2016 totalled 2,044 lots, at a cumulative success rate of 78%, and raising more than £275m.
The 2,000th property sold was Kirk House & Old Manse in Laurencekirk, Aberdeenshire – with five-bedrooms in the former church and four-bedrooms in the manse next door, which sold at Auction House Scotland’s auction in Glasgow on 25th August, for £390,000.
Commenting on the group’s performance, founding director Roger Lake (left) said: “This is another set of excellent figures during a challenging time for the industry – what with the uncertainty of Brexit and the continuing concern over the previous chancellor’s additional 3% stamp duty for landlords and second home buyers. But we are now getting back to usual volumes, and I can also report that September entries are on a par with last year, at 530 lots.”
He continued: “Whilst some investors remain cautious, others see the current climate as an opportunity, as property continues to be the highest yielding investment on offer to the general public.
“Demand in our Northern and Midlands sale rooms has remained strong throughout, and we are reporting good success in Scotland too.”
Property auction market activity weakened in September, with the volume of lots offered and lots sold both falling by 6% and 8.5% respectively, whilst the overall amount raised fell by £36m – down 8.4%.
When coupled with the falls witnessed in July, it is unsurprising to see that Q3 figures provided by EIG were also down on last year, with sales dropping by 6% to 6,145 lots from 6,559 in Q3 2015 and revenues down over 11% to £956m from £1.079bn.
“It should be noted, however, that these falls are still dwarfed by the drops we saw back in 2008 and 2009, when double-digit decreases were evident almost every month,” said David Sandeman at EIG.
Both the residential and the commercial property sectors experienced falls in lots offered last month, with residential instructions dropping by 5.5% from 3,345 lots to 3,160 lots and commercial instructions dropping by 8.1% from 530 lots to 487 lots.
Whilst falling by around 10% in September and Q3, the residential amount raised remains up over 8% for the rolling year – October 2015 to September 2016 – and up 7.7% for the same period in the commercial market.
Clive Emson catalogued a total of 138 lots in September and achieved a sale rate of 75%, raising more than £17.5m worth of land and property, amid fierce competition from investors.
Highlights from Clive Emson’s sale featured more than £1.25m worth of residential properties in the Isle of Wight, including houses, flats, cottages and two HMOs, which were snapped up by buy-to-let investors, along with stand-alone garages in Maidstone and Mitcham, Surrey, which sold for £18,500 and £15,000 respectively, and the Beacon Court Tavern in Gillingham, Kent, a former music venue which was acquired for £370,000.
Also, a fire-devastated terraced house in Rye, Sussex, went for £122,000 and in Brighton, a four-storey commercial property in need of complete renovation at the heart of the city's vibrant Lanes area went for £352,000. Both properties offer plenty of room to add value.
Clive Emsons’ managing director, James Emson (right), said: “Generally, demand remains strong for property across the board, particularly amongst investors.
“Some of the prices we have obtained last month show just what can be achieved with the right lots.”
Network Auctions’ sale on Friday 14th September at the Grosvenor House Hotel on Park Lane in central London, saw 14 of the 26 lots offered sold – 54% sales success – raising just short of £3m.
There were a wide range of opportunities for purchasers and investors, including refurbishment projects, buy-to-let investments, commercial investments, development and redevelopment opportunities including land with and without planning consent and property suitable for owner-occupation across the UK.
Highlights included a one-bedroom flat, let on an AST producing £5,700 a year, which was sold for £70,000, a three-bedroom semi-detached house in Greenhithe, Kent, which fetched £218,000, and a four-bedroom bungalow in St Austell, Cornwall, which sold for £320,000.
Toby Limbrick (left), managing director of Network Auctions, said: “Our sales have generated fantastic results with considerable buyer interest and enthusiastic bidding.
“Any concerns over Brexit appear to have been more than offset by the low inflation, low interest rate economy which is seeing investors and other buyers remain confident in the UK property market.”
*Marc Da Silva is Estate Agent Today and Letting Agent Today Features Editor. You can follow him on Twitter @propertyjourno