The second quarter of the year kicked off with a busy April, with residential property auction sales remaining relatively firm despite the introduction of the new stamp duty surcharge at the start of the month.
The number of residential lots sold in April fell marginally by 1.4%, owed in part to a 1.8% decline in the volume of lots offered for sale, and yet residential auction receipts totalled £213.3m – up 3.1% on April 2015, according to official figures from the Essential Information Group (EIG).
The rolling quarterly figures showed double-digit rises in lots offered, lots sold and amount raised, as a consequence of the unprecedented results witnessed in the first few months of this year, breaking some long-standing records in the process as property buyers rushed to complete transactions before the new stamp duty surcharge was introduced on 1 April.
“The recent changes to the stamp duty land tax payable on buy-to-let and second homes has not had the detrimental effect on the auction market that some people may have feared,” said David Sandeman, managing director, EIG.
“It was very much business as usual in the auction market.”
However, there was a sharp decline in commercial property auction activity in April, with the volume of lots sold falling by 38% from 372 to 231 lots, driven largely by the fact that the number of lots offered for sale dropped to 333 lots from 511 in April 2015 – down 35% year-on-year.
Sandeman continued: “Given that 141 fewer lots sold it is not surprising to see a drop in commercial receipts – down 18.6% to £28.9m, but whilst these numbers are down it should be noted that none of the major London commercial auction houses held an auction in April so the drop is entirely due to variations in the stock offered by regional auctioneers.”
Overall, 139 property auctions were held across the UK in April, with 2,462 lots going under the hammer – down 8.1% on last year. Lots sold fell by a similar amount, from 1,965 to 1,802 lots, whilst the amount raised was comparable at £242.2m.
“The rolling quarterly figures show growth of 5% in lots offered and lot sold, and a huge 23% gain in the amount raised compared with the same period last year – over £250m in real terms,” Sandeman added.
Graham Penny Auctions
At the start of April it was announced that Shepherd Direct Limited (SDL) Group had acquired East Midlands based Graham Penny Auctions as part of its efforts to create a new national brand.
It was the second acquisition the Chilwell-based firm had made following the purchase of Birmingham based CP Bigwood auction house in January.
In 2015, Bigwood sold more than £77m worth of property across six auctions, up by £15m on 2014. Graham Penny Auctions, meanwhile, raised more than £72m last year.
The first sale for the rebranded SDL Graham Penny took place at the iPro Stadium in Derby on 14 April, where the firm sold 35 of the 49 lots on offer – 72% sales success – including post-auction sales, raising close to £4.2m.
Andrew Parker, managing director at Graham Penny, commented: “There were scores of excited bidders in our auction room all keen to see the gavel fall on the lot they had their eye on. We had a wide range on offer from investment properties to mixed use premises, development land and buy-to-let houses all receiving significant interest. Plus we had a number of different types of buyers from landlords looking for a buy-to-let through to owner occupiers looking for their next home.”
Barnard Marcus’ sale in April, which raised £21.5m on the back of a 77% sales success – was the firm’s third auction of the year with the combined results of their auctions raising £84m to date, up 23% compared with the same period a year earlier, demonstrating that buyer appetite for well located property remained strong.
A brief look at their results over the first three auctions of this year compared to last year showed:
- Instructions up 18% to 591 lots offered
- Sales volume up 65 lots to 450 lots sold
- Capital value of sales up 23% to £84m
Speaking after the April auction, divisional managing director Chris Glenn (pictured) said: “Whilst we did detect a degree of caution from some buyers [following the introduction of the stamp duty surcharge], it remains clear that quality well located lots were snapped up through competitive bidding and buyers recognising that any additional costs that they now face with their purchase would quickly be dissolved by continuing house price rises driven by demand.”
Property auction sales rose sharply in May on the back of a significant increase in the volume of lots offered under the hammer.
Some 3,200 lots were offered for sale in May, up 21% compared with May 2015, contributing significantly to the 17% annual rise in the number of lots sold to 2,374. Furthermore, the total raised at property auctions across the UK increased by more than £100m to £524.6m, the largest amount raised in the month of May for nine years.
Many property commentators predicted that the recent changes to stamp duty would cast gloom over the property auction market, particularly in the residential sector, but the gains shown in the market certainly bucked the trend and dispelled any notion of a declining market.
“These results are particularly pleasing as they've come against a backdrop of economic and political uncertainty caused by the impending EU referendum, which many forecasters warned could have a short-term detrimental effect on the housing market,” said David Sandeman, managing director, Essential Information Group (EIG), which provided the data.
The EIG figures showed rises in 26 out of the 36 metrics measured, with many recording double-digit increases.
Notably, in May the residential market recorded increases of 24% and 19% for lots offered and lots sold respectively, and a staggering £63m increase in the amount raised - up 25.7%.
Further double-digit gains were evident in the rolling quarterly figures, with almost £100m extra revenue gained in the last three months compared with the same period last year - up 14% from £704m to £802.7m.
In the commercial property market, lots offered increased by 14% to 755 lots, while lots sold rose by 13% to 594 lots.
“Despite the recent upturn the rolling quarterly figures remain down on last year, with lots offered and lots sold both falling by 12%, although the amount raised did gain £58m to £407.1m,” added Sandeman.
Allsop Residential defied reports of a cooling housing market with the 2,000 or so prospective buyers at London’s Cumberland Hotel on 26 May clearly undeterred by stamp duty increases and tax relief cuts, as reflected by the £63m raised.
Competition was fierce, particularly for opportunities in London and the South East. Those who found prices in the capital a little too steamy looked further afield and pushed prices for regional stock.
Speaking after the auction, auctioneer Gary Murphy (pictured) commented, “This was an exceptional day. We were expecting the sale to be strong. But the depth of demand and furious competition for many lots actually took us by surprise."
"It’s clear that London remains top of many investors’ lists. And whilst recent stamp duty increases may be unwelcome, these are simply an additional cost, at the end of the day. As long as the sums still work, buyers are there to do battle.”
With housing in short supply and would-be first-time buyers finding it difficult to put a foot on the ladder, with renting the only option, buy-to-let remains extremely attractive to investors, according to Murphy.
“Buyers I have spoken to have not been fazed by the Chancellor’s attempts to cool the market with tax changes. The result is rising capital values and this has fuelled demand for development opportunities. The sweet spot seems to be individual homes up to £800,000 in the South East,” he added.
Allsop's May results at a glance:
||Average lot size
|Ground Rents (80 yrs+)
||Average lot size for single vacant units
|Within the M25
|UK excluding M25
Bidders showed keen interest in properties in Liverpool and as far afield as St Helens, Wigan and North Wales at Sutton Kesh’s May sale at Liverpool's Crowne Plaza which raised £4.6m after selling 73 of the 95 lots on offer – 77% sales success.
A wide range of lots saw competitive bidding included a three bedroom terrace in Pitt Street, St Helens, which sold for £13,500 above the £40,000 guide price and a three-bed terrace in Cecil Street, St Helens, with a guide of £40,000 which sold for £58,500.
Cathy Holt (below), associate director of Sutton Kersh auctions, said: “We are seeing a lot of investor interest in the outlying regions of Liverpool at the moment, particularly Wigan and St Helens.
“Buyers are looking for rental and development opportunities in areas with good potential. Some of our lots in St Helens in particular saw fierce bidding, with many going for well above the guide price.”
“The increased interest definitely points to a growing confidence in the housing market within commuter areas of the city region.”
A marina is not the sort of lot that you would usually see featured in a property auction but investors turned out in their droves to see it sell at Acuitus’ latest auction in central London.
Waterside Marina, a residential and retail complex in Brightlingsea, Essex, CO7, is currently receiving £483,430 per year in rent, and was offered at a guide price of £5m. Following fierce competition among bidders, the 7.44 acre property, encompassing a 50-berth marina and 133 homes plus shops, finally sold last week for £6.6m, generating a gross rental yield of 7.32%.
The marina was among 93 lots being offered by Acuitus in May in what was the auction house’s largest catalogue so far this year.
A staggering £56.2m worth of property sold at the sale, which took place at the Radisson Blu Portman Hotel in Portman Square, central London, under the watchful eye of hundreds of property investors, and achieved a 75% success rate.
Acuitus auctioneer, Richard Auterac (pictured), said: “There is little evidence that our buyers are being influenced by the EU referendum. Indeed a close analysis of the individual sale results suggests a significant hardening of yields as buyers lock into a steadily improving secondary commercial property market against a background of low returns in the bond market, volatility in the equity market and attractive bank loans for property purchases.”
Auterac added: “Investor confidence across the sectors and throughout the country continues to improve. We saw sales that encompassed locations in England, Scotland and Wales. This broadening of demand is being driven in part by the continued flow of new investors into our commercial property market.”
The UK property market retracted slightly in June in the run-up to the EU referendum and in the few days after the historic decision to leave the 28-member bloc.
Data from EIG shows that the number of properties offered at auction fell by 10% in June to 2,662, when compared with the 2,950 lots recorded the previous year, while lots sold tumbled by 12% from 2,239 to 1,961.
The residential auction market saw falls of 6.6% in lots offered and 8.8% in lots sold last month, and a 16.3% slump in the total amount raised. But despite these falls, the quarterly and rolling yearly figures remained largely positive due to a strong run of results in the months leading up to the EU referendum, reflecting the fact that auctions continue to prove to be an attractive and successful format with thousands of properties selling under the hammer each month.
Cheffins’ June auction saw plenty of lots far exceed guide prices. But the Cambridgeshire surveyors and auctioneers said the star lot in the sale was the Bulls Dairies building (pictured), one-time suppliers of Jersey Milk to the local residents in Cambridge.
Originally a dairy, the buildings on 44 and 44A Hills Road, Cambridge, were acquired by the Bull family in 1925. They have had a variety of uses, including local favourite, Annabelle’s sandwich shop, and most recently, Manger to Go. The buildings still bear the original Bull’s Dairies mural, an iconic image on Hills Road, which the owners would like a purchaser to retain.
Number 44 and 44A Hills Road is a prominent, mixed-use investment property, including a commercial unit at ground and basement floors and a residential maisonette on the first and second floors. Minutes from Cambridge city centre, the building sold for £608,000, £183,000 over its original guide price.
In total, Cheffins’ latest auction raised more than £3m as “frantic” bidding drove many lots to sell for well above their asking prices.
Other notable lots sold included 6.94 acres of land near Newmarket which sold for £102,000 off of a guide price of £65,000. Similarly a derelict barn in the centre of St Ives, just outside of Cambridge sold for £47,000, off of a guide price of £10,000.
Simon Gooderham, director, Cheffins, commented: “There was a real buzz in the room and some frantic bidding on many of the lots. There was an incredibly strong demand for amenity land throughout the Greater Cambridge region, in addition to fierce competition for Cambridge city centre investment opportunities.
“Due to the vast levels of investment into Cambridge from some of the world’s largest companies, such as Google, Amazon and Astra Zeneca, we have seen property auctions attended better than ever before.
“The Cambridge market appears to have the perfect storm of vast amounts of buyer-types, coupled with a lack of available stock, all of which means that prices have soared by 50% in the past six years. Similarly, development opportunities are becoming ever-harder to find and are therefore achieving ever higher prices.”
A former telephone exchange with residential planning consent near Diss in rural Norfolk, which sold for £110,000 against a guide of £50,000, was among the auction highlights in June as property auctioneer Clive Emson reported sales of more than £18.5m and a success rate of 83% from 145 lots.
Other highlights from Clive Emson’s June sale included a Royal Methodist Church in Tunbridge Wells – considered to have development potential selling for £900,000 against a guide of £500,000 to £600,000.
Three adjoining properties in Brighton arranged as seven purpose-built units – currently generating £17,564pa in rent with three vacant – went for £940,000 on a £750,000 guide.
In the Hampshire section, a derelict former scout hut achieved £145,000 in a bidding war - £40,000 above the guide.
With four of the eight 2016 auctions now complete, Clive Emson has enjoyed an impressive first half of the year with sales to the value of £84m at a success rate of just over 85%, which is above the national average.
James Emson (right), managing director at Clive Emson, said: “We are continuing to see excellent results across the board even with outside influences interfering with the usual ebb and flow of the property market.”
*Marc Da Silva is Estate Agent Today and Letting Agent Today Features Editor. You can follow him on Twitter @propertyjourno