Auctions are a great way to sell property competitively, with a wide range of homes often selling under the hammer, and occasionally for more than may have been achieved by private treaty.
Among the many attractions of selling property at auction is that buyers and sellers, as well as agents, avoid conventional drawn out transactions, as the property is sold in a matter of minutes as soon as the hammer falls.
This may therefore help explain why a growing number of agents across the UK are expanding their business and generating extra revenue by signing up to agent partner programmes to provide an alternative way to sell property.
So how did the property auction market perform during the first three months of the year?
January was an extremely quiet month, with just 408 lots offered in 15 auctions held across the UK, with all but 15 of the lots residential properties.
Of the 393 residential lots that went under the hammer, 303 lots sold - 77% sales success - with a total value of £30m. The rolling quarterly and yearly figures were largely positive, with lots offered up 4% in both periods and small increases in lots sold, according to the data from the Essential Information Group (EIG).
Overall Statistics January 2017
|Auctions Held in the UK||15|
|Total Lots Offered||408|
|Total Lots Sold||315|
SDL Auctions in Stoke, which works with agents such as 1st Choice for Property, Newman, Northwood and Martin & Co, among others, had seven residential and commercial properties as well as building plots in its sale on 27 January at the bet365 Stadium in Stoke, with four lots sold for a total of £423,000.
Among the lots selling well in the auction room was a three-bedroom semi-detached house which needed refurbishment on Leek Road, ST1, but sold for £85,000 against its pre-sale guide of £78,000.
A detached four-bedroom mock Tudor family home at Bowmead Close, Trentham, saw an even bigger increase between the guide and final sale price. It went into the sale at £165,000 but by the time the gavel fell that had been pushed to £194,000.
Auctioneer Andrew Parker said: “It was great to hold our first auction in Stoke."
"We’ve regularly sold properties in Stoke in our other East Midlands auction rooms so we were excited to expand our auction calendar into Staffordshire.”
Parker said that the lots which sold in the auction room achieved more than their vendor clients were hoping for, while their buyer clients were “happy they’d stuck to their budgets”.
Mark Jenkinson & Son
Mark Jenkinson and Son’s first auction of 2017 raised £2.75m at a busy auction held at The Platinum Suite, Sheffield United Football Club.
Rundown houses and a former school building were among the highlights of the auction which saw 100% of the 27 properties on offer sold under the hammer.
The highest price of the day was £352,000 for a three-bedroom semi-detached house on Banner Road South, S11.
To date, auctions held this year have seen Mark Jenkinson and Son sell 84 of the 95 available lots for a total of £9.16m.
“The demand for unmodernised houses remains particularly strong”, said Adrian Little, head of the auction department at Mark Jenkinson and Son.
Overall, the low number of lots offered for sale in January meant that we could not draw any meaningful conclusions, and so it was all eyes on February’s activity levels to see if the industry could pick up where it left off in December when auction activity levels boomed and amounts raised surged.
An initial glance at the auction market’s performance during February would suggest that it was a bad month, with the number of lots offered and sold both falling by 14% year-on-on-year.
But it is worth noting that in February 2016 the market saw a sharp rise in sales due to buyers and sellers wanting to complete before the impending stamp duty changes, which subsequently came into effect at the start of April 2016.
Looking at the data over the course of the last decade, the 3,849 lots offered and 2,989 lots sold in February are on a par with previous years’ results, and not the disarray that the percentage declines would at first glance suggest.
While the amount raised at auction understandably fell 15% on last year, the total of just over £570m was still £93m more than in February 2015 - a gain of 20%.
|Auctions Held in the UK||119|
|Total Lots Offered||3,849|
|Total Lots Sold||2,989|
It was standing room only at the Marriott Hotel in Grosvenor Square on Monday 13th February as Savills Auctions returned to the venue for their first sale of 2017.
With 216 lots on offer, the crowded room was filled by a large cross section of buyers hoping to secure a good deal, attracted by a diverse catalogue.
Unsurprisingly, properties that offered the potential to add value attracted fierce competition, helping to push the average sale price up to £376,000, compared to £310,000 during 2016.
In total, just short of £65m was raised during the course of the day, with an 80% success rate.
Chris Coleman Smith (left), head of UK London & National Auctions, commented: “Our first auction result of 2017 should set a positive benchmark for the year ahead. This week clearly demonstrated that there is plenty confidence in the market.
“In the past ten years we have only had five sales raising over £60m, and this result shows the continued strength of the auction room.
“During 2017 realistic pricing remains key to attracting motivated buyers and achieving the best results.”
IAM Sold, which works with several agents, including Linley & Simpson, Jan Forster, house network, Robinsons and Your Move, achieved its best success rate in the South Yorkshire area for more than 12 months, with 32 of the 37 lots on offer at the New York Stadium sold under the hammer, raising a total of almost £2.5m.
Among the highlights of the company’s mid-February sale was an 18th century stone built cottage on St. Johns Road in Laughton-en-le-Morthen which sold for £167,500, achieving £18,500 above the starting price.
A three-bedroom mid-terraced house on Gleadless Road, Sheffield, which sold for £82,000 also proved popular, as did a three-bedroom detached house on Serlby Lane in Harthill, which was snapped up for £270,000.
Jamie Cooke, managing director of IAM Sold, said: “This auction demonstrates that there is strong market demand, with several lots achieving above their starting prices, driven up by competitive bidding.”
The property auctions market slowed across the UK in March, with the number of lots offered and sold at auctions falling, providing us with a better indication of the state of the market.
The data from EIG revealed that the overall volume of lots offered was down 6.5% year-on-year in March, from 2,962 lots to 2,769 lots, whilst lots sold fell by 5.7%, from 2,188 lots to 2,064 lots.
The total raised at auction fell by £32m to £402m, down 7.3% from £434m raised in March 2016, the EIG said.
The annual decline could be largely attributed to the unprecedented spikes in market activity recorded in February and March last year as those acquiring an additional property, particularly buy-to-let landlords, rushed to buy ahead of the stamp duty change deadline at the start of April 2016, after which a 3% surcharge was added for second home buyers and buy-to-let investors.
“We may also be witnessing a market which is just easing back the throttle a little,” said David Sandeman (left), managing director at EIG. “It wouldn't be unsurprising either, considering that the government has recently introduced measures to try and cool the buy-to-let market whilst house price inflation has also seemingly slowed.”
Despite the drop-off in numbers, Sandeman said it was encouraging that auctioneers are still seeing an average sale rate of around 75% which shows sale rooms remain “competitive with buyers aplenty”, he added.
|Auctions Held in the UK||127|
|Total Lots Offered||2,769|
|Total Lots Sold||2,064|
The residential sector saw instructions fall by 9.3% in March, down 229 lots to 2,228, whilst sales dropped by almost 8% to 1,646 lots.
Figures for Q1 show double-digit falls in lots offered, sold and amount raised, but Sandeman insisted that “it should not be cause for alarm” as it is almost entirely due to the “record-breaking activity” witnessed in Q1 of last year.
Commercial lots offered increased by 7% in March, to 541 lots, up from 505 in March 2016, whilst sales grew by almost 5% to 418 lots sold. But the amount realised from commercial property sales fell by 14%, or £23m, indicating a rise in smaller lot sizes.
Properties offering guaranteed yields proved particularly popular with buyers at Cheffins’ first auction of 2017 in Cambridge.
Almost £4.2m worth of property was sold at the firm’s sale, which saw more than 200 purchasers in attendance.
The maximum prices paid were for commercial properties with solid investment incomes throughout the Eastern region.
The star lot of the day was a freehold mixed-use building in Biggleswade which achieved just over £1m against a guide of £900,000, making it the record hammer price ever recorded at a Cheffins auction. Generating an annual income of £50,000, the property saw competitive bidding within the room, eventually selling to a local investor.
Similarly, a mixed-use building on Ramsey High Street in Cambridgeshire sold for £208,000 against a guide price of £140,000. The property also offered a solid investment and currently generates an annual rent of £19,500.
Over £1m-worth of land was sold in total across 12 lots.
Ian Kitson, director at Cheffins, said: “Investment properties offering guaranteed yields really set the room alight in our first sale of the year.
“With competitive bidding from both local and national buyers, the record price made at Biggleswade goes to show how auction really is the best forum to generate the most interest for these popular mixed-use properties.
“With guaranteed rental incomes, the investment properties within the sale were snapped up by local buyers who bid against investors from all over the UK. This is reflective of the increasing desirability of the region’s smaller towns which are seeing investment throughout both commercial and residential properties, especially as returns on wider investment types remain fragile.
“As prices are continuing to rise across all property types in the region, we are expecting to see ongoing inward investment with mixed-use offerings continue to sell at premium prices.”
Allsop raised a total of more than £54m at their March residential auction, with an overall success rate of 71%.
The average lot size was £368,000 and five of the properties sold achieved in excess of £1m.
The largest lot to sell was Lot 26 – a freehold former health centre with potential for redevelopment in Greenford, Middlesex – which sold for £2m, more than double the guide price of £900,000-£950,000.
Quality lots with redevelopment potential attracted considerable interest, such as lot 31, a mid-terrace office and retail unit in Staines with permitted development, which sold for £410,000 compared to the guide price of £295,000.
Gary Murphy (left), partner at Allsop, commented: “As ever the catalogue was very diverse, both geographically and with regard to the types of properties available, but the common theme was the importance of pricing.
“In particular, higher value assets and poorer quality lots, for which the pool of bidders is likely to be more limited, need keener pricing. Where lots were priced sensibly they saw competitive bidding, with many going under the hammer well in excess of the reserve.”
Having sold £17m in value prior to the action and with deals still being on unsold lots done post-auction, the sales process has also proved a successful catalyst for transactions before and after the event itself.
“Notably, distressed sales were at the lowest level for a number of years, which is a good sign of an improved economy,” Murphy added.
*Marc Da Silva is Estate Agent Today and Letting Agent Today Features Editor. You can follow him on Twitter @propertyjourno