No longer just a domain for investors, developers and property traders, the auction room is now the preferred option of buying and selling property for a number of people looking for a fast and secure method of sale.
With no chain and the buyer committing legally on the fall of the gavel with an exchange of contracts secured by a 10% non-returnable deposit, auction sales remove the stresses and uncertainty of subject to contract transactions, ensuring that estate agents who market property through this method can speed up the process and eliminate the risks of gazumping and gazundering.
With a number of agent partner programmes available nationwide, property auctions provide estate agents with a powerful platform to expand their business and generate additional revenue by selling homes under the hammer.
So how did the property auction market perform in the fourth quarter of 2016?
Property auction market activity slowed in October, with the number of lots offered and lots sold both falling by 4.1% and 3.3% respectively, compared with the same month in 2015, whilst the overall amount raised dropped by £72m - down 14.3% year-on-year, according to the latest figures.
“Change and uncertainty has contributed to the slowdown in market activity over the last few months,” said Strettons’ director Philip Waterfield (right).
However, it was perhaps unsurprising to see a fall in both lots offered and lots sold when compared with October 2015, given the fact that 150 auctions were held across the UK in October, 12 fewer compared with the corresponding month a year earlier, causing the total amount raised to fall to £444m, down from £518m a year earlier.
|Overall Statistics October 2016|
|Auctions Held in the UK||150|
|Total Lots Offered||3,133|
|Total Lots Sold||2,327|
Mark Jenkinson & Son
Property auction sales of almost £3.8m suggested that Sheffield’s property market remained in good health despite heightened uncertainty surrounding the recent Brexit vote.
Mark Jenkinson & Son raised £3.75m at its October sale held at Sheffield United’s Bramall Lane with 30 of the 35 lots offered snapped up by property investors – including three post-auction sales.
The outcome of the auction, which included the sales of an old people’s home and a public toilet, showed a “healthy state of affairs” in Sheffield’s property market, according to auctioneer and partner at Mark Jenkinson & Son, Adrian Little.
The highest price of the day was £415,000 for an eight-flat complex in Steade Road, Nether Edge.
“I think [the sale] was a really positive example of what’s going on in the market,” said Little.
“It’s [the sales success rate] probably higher than it was at the peak of the market in 2006 and 2007. It’s a very strong overall level,” he added.
A packed room and competitive pricing saw more than £3.5m raised at the Savills regional auction in Nottingham, which took place at the city’s racecourse on 20 October.
The property sale saw bids come in from around the world, including countries such as Spain and as far away as Japan.
“With telephone and online bidding increasing, we now have the ability to offer lots internationally, appealing to a far wider audience than ever before,” said Bob Crocker, auction manager and director at Savills Nottingham.
Among the highlights of the sale, a traditional end of terrace property in Mansfield, Nottingham, was snapped up for £61,000, a development site in St Anns, Nottingham, for £263,000, land in Market Warsop, was acquired for £120,000, while intense competition saw a commercial development site in Worksop sold on behalf of B&Q at the guide price of £300,000.
Victor Ktori, head of office at Savills Nottingham, commented: “This auction once again generated considerable enthusiasm from those in attendance, with a number of properties across the country selling for well in excess of the guide price.
“Plots of land proved particularly popular, suggesting that developers are now being more active as schemes become increasingly more viable as the market continues to stabilise.”
Auction rooms across the UK are regularly filled with people looking for their next property acquisition, but the market was quiet in November - very quiet.
The number of property auction lots offered dropped by 7.6%, from 2,341 lots to 2,163 lots, whilst lots sold fell by more than 10% to 1,591 lots from 1,774 in November 2015.
Despite the dip in sales, the data from Essential Information Group (EIG) revealed that auctioneers saw revenues increase by 2%, from £272m to £277m.
The residential auction sector witnessed a 1.1% fall in lots offered, from 1,990 to 1,969, while the number of lots sold fell by 4.7% from 1,508 to 1,437, and yet residential revenues were up 7%, from £239m to £255m.
“These results are indicative of the market’s form over the last six to nine months, and are perhaps unsurprising given that the economic and political backdrop has changed markedly during this period,” said David Sandeman (right) at EIG.
“It would be a brave man to predict what the future holds in 2017, but one can be sure that auctions will continue to provide a quick, transparent and effective means of buying and selling property,” he added.
|Overall Statistics November 2016|
|Auctions Held in the UK||118|
|Total Lots Offered||2,163|
|Total Lots Sold||1,591|
A strong showing from buyers helped Allsop raise £61.1m at their November residential property auction, held at the Cumberland Hotel in central London.
Despite heightened uncertainty following the EU vote, as well as the introduction of higher property taxes for investors and those buying at the top-end of the market, no fewer than 149 lots were acquired by investors – 71% sales success rate, with one particularly popular lot, Levens, a 11,000 sq ft house on Broadwalk in Winchmore Hill, north London, selling for £4.21m.
Development sites also proved popular, such as lot 61 - a cleared, freehold site in Chalk Farm with planning for nine apartments - which sold for £3.31m.
Overall, income-producing lots attracted the most competitive bidding, according to Richard Adamson, partner and auctioneer at Allsop.
He said: “The general mood in the auction room was one of positivity underpinned by sensible caution. There was still concern from buyers and sellers due to the political uncertainty, but there was clearly an attitude of ‘back to business’.
“As a result, there was an inevitable flight to quality, as buyers honed in on good quality and reliable income producing investments due to the poor returns being offered in other investment sectors.
“In particular, lots guided over £1m performed very well, especially given the fact that most buyers are incurring much higher purchase costs than they were a year or so ago. This indicates that, albeit reluctantly, the market has absorbed and adjusted to the SDLT surcharge.
“The market is moving all the time, especially regionally. Aligning sellers and buyers price expectations is as challenging as ever, but it’s a sign of an unpredictable market.”
Chapels, historic houses, city centre apartments and a holiday park with a difference were among 160 lots catalogued by Clive Emson Auctioneers for the five-day October/November sale.
It followed the firm’s September auction in which more than £17m worth of land and property was sold on the back of an 80% success rate.
The highlight of the sale was arguably the iconic Brunel Camping Carriages Site at Dawlish Warren in East Devon which features chalets in converted railway carriages and was sold for £261,000.
The holiday park has eight locomotive carriages. All are named individually after UK cities. Each includes a kitchen, living area, bedroom and bathroom to sleep six to eight people.
Managing Director James Emson (left) said: “Land with planning permission was a popular choice with builders looking to stock up, perhaps getting ready for 2017 and the spring markets.
“Grazing land attracted good interest and several lots offered potential for the future which are seen by many as a calculated punt.”
The property auction market in the UK finished 2016 strongly and set new records in the process, fresh figures provided by the Essential Information Group (EIG) show.
Overall the volume of lots offered in December was up over 12%, from 3,336 lots to 3,745 lots, whilst lots sold increased by 9%, from 2,591 to 2,830. This is the largest ever number of lots offered and sold during the month of December, beating the previous highs of 3,529 lots offered in December 2007 and 2,675 lots sold in December 2013.
Given the record number of auctions last month, it is perhaps unsurprising to see that there was a significant increase in the amount raised - up 5% to £537m, the largest amount realised in December since 2016.
“Having reported on a challenging few months towards the latter part of last year, it is pleasing to see that the industry enjoyed an extremely positive end to proceedings and set new records in the process,” said David Sandeman at EIG.
Residential lots offered increased by almost 12% in December, equating to 317 more lots being offered when compared with December 2015.
The large gain in the number of residential instructions helped propel Q4 into a 1.4% gain in this regard, from 7,246 in Q4 15 to 7,351 in Q4 16, whilst annually the market saw growth of 4.2% equating to 1,136 more lots being offered compared with 2015.
The commercial sector saw a 15% rise in lots offered during December, up from 623 lots to 715 lots, whilst lots sold increased by almost 12% from 508 to 567 lots.
|Overall Statistics November 2016|
|Auctions Held in the UK||110|
|Total Lots Offered||3,745|
|Total Lots Sold||2,830|
Feather Smailes Scales
Feather Smailes Scales (FSS) has been selling properties in Harrogate for more than 20 years and their ability to spot a property that will do well at auction paid dividends for dozens of sellers in 2016.
But as always, the key is in setting the guide price at a level that is both realistic and acceptable to the seller, according to Auctioneer Richard Smailes.
“If the guide price is right, it’s a win-win situation for the seller with no upper limit to the price that can be achieved,” he said.
FSS runs regular property auctions at Pavilions of Harrogate. Its December sale achieved a 72% success rate with one lot in particular standing out.
The star of the show was a three-bedroom semi-detached house on Beech Road in Harrogate, in need of modernisation. The guide price was £190,000 but there was plenty of interest in the room and the property eventually sold for £248,000.
Smailes commented: “These kinds of bids, well above the guide price, just don’t happen when a property is sold in the usual way and the prices we managed to secure at auction during 2016 have proved why selling by auction can be such a good move.
“The other big advantage of an auction is that the sale is binding on the fall of the hammer and the seller can have the money in their bank within weeks.
“The fact that contracts are exchanged as soon as the hammer falls brings certainty for the seller and there is the added advantage of bringing the property to market in a competitive environment, where interest from several parties can push the price up beyond market expectations.”
The UK housing market usually shows signs of cooling as it enters the traditionally calm period in the run-up to Christmas, but there was still plenty of activity at Cheffins’ auction in Cambridge, where more than £1.65m worth of property sales achieved and a sale rate of 77%.
Ian Kitson, an associate at Cheffins, said: “December sales often feature slightly smaller catalogues than the rest of the year, but there was good interest in a range of the lots throughout the marketing period, suggesting that buyers remained motivated regardless of the looming festive period.
“We saw a good turnout on the day and achieved strong prices across the board. The sale rate of 77% appears strong compared to some of the results being reported nationally and we can attribute this to the quality of lots on offer, as well as the popularity of our region.”
Investment properties offering scope for development or with options to renovate attracted the most interest, with competitive bidding and results well over guide prices across multiple properties.
The highest value lot of the day was a development site of 0.2 acres in Westfield Road, Great Shelford, near Cambridge. The site had planning permission for the demolition of an existing bungalow and the creation of two detached houses. The property saw fierce bidding and the site was sold for £419,000 to a local developer.
A similar offering was lot 11, Brickyard Cottage in Bradley Common, near Bishops Stortford. Selling for £8,000 over its guide price of £250,000, the property presented a rare opportunity to purchase a house in need of complete renovation or replacement. At over 0.18 acres, the site is in a desirable village location, with easy access to Bishops Stortford train station.
Kitson added: “Renovation projects and investment opportunities were definitely the most sought-after lots of the day at this month’s auction.
“Previously the mainstay of property developers, we are actually seeing a shift in the types of person who look to purchase renovation projects, with a larger number of owner-occupiers entering the bidding.”
*Marc Da Silva is Estate Agent Today and Letting Agent Today Features Editor. You can follow him on Twitter @propertyjourno