As we conclude our blog series today on the property market, we delve into the most important element for us as auctioneers. The Property Auction Market.
The recent happenings as of August 2024.
The auction market, often seen as a barometer for the wider property sector, has been teeming with activity, reflecting broader economic patterns and buyer sentiment.
A Robust Beginning to August
The property auction scene has kicked off August with a bang. Despite the typical summer lull, the market has shown tenacity, with intense bidding and a significant number of sales. Auction houses have reported a steady stream of interest, with numerous properties exceeding their reserve prices, indicating robust demand.
Key Market Developments Digital Transformation
The continued integration of digital platforms has completely transformed the auction market. Online auctions have become the norm, facilitating broader, global participation. This has proven particularly advantageous during the holiday season, maintaining market liquidity even when many potential buyers are on vacation.
In addition to the above, Eig’s commentary on the national auction market in July 2024 provides further context on the figures in real terms. David Sandeman comments in his latest news letter which is often seen as leading opinion in the market:-
“The market showed substantial growth, with 35 out of 36 key indicators showing increases, reflecting a strong performance across the board.
This growth was propelled by the early timing of three London auctions which last year fell into August, and the rise of two-day sales from some of the larger auctioneers, both of which have bolstered all major metrics.
Nationally, the total lots offered in July surged by 36.9% compared to the same period last year, while lots sold saw an even more impressive 41.3% increase. The residential sector outpaced the commercial sector, with a 40.0% rise in lots offered and a 43.9% increase in lots sold. The overall percentage of lots sold improved to 71.1%, driven by strong demand, and the total amount raised reached £610.6M—a remarkable 55.3% increase year-over-year.
However, the concentration of auction activity in July could lead to a potential slowdown in August, as some sales that typically occur later were brought forward. This impressive growth also raises questions about the sustainability of such momentum in the coming months.
With UK Finance announcing a 34% year on year increase in mortgage repossessions, which were previously a mainstay of auctions prior to the pandemic, it appears that the growth trajectory of auctions could well continue if a proportion of this stock comes to the rostrum.
Regional disparities have emerged, with the North-East and London leading in growth, while Scotland faced declines in both lots sold and total raised, due to landlords choosing to divest following from the changes brought in with the Cost of Living (Tenant Protection) (Scotland) Act 2022.”
eigpropertyauctions.co.uk/news/newsletter/2024/august
Shift Towards Green Properties
There has been a noticeable shift in buyer interest towards properties with green credentials. Homes with energy efficiency and renewable energy sources are fetching higher prices at auction, mirroring the growing environmental awareness among buyers and a wish to protect investments against escalating energy costs.
The Appeal of the ‘Fixer-Upper’
Economic uncertainties have sparked a trend where buyers are hunting for properties that offer opportunities for value addition. And just in a small amount. Many of our buyers are openly and actively searching for opportunities to invest, which without needing to much asset management, at the point of being offered to the market clearly illustrate the potential for a 6 figure cash, or double digit yield – often in excess of 15%.
Properties requiring renovation or those with planning permission
Are in high demand, as buyers seek to add value in a market where immediate profits are increasingly elusive.
Regional Hotbeds
Certain regions have emerged as hotbeds in the auction market. Areas with substantial infrastructure investment, such as those near the previously proposed HS2 rail link, have attracted increased interest from buyers looking to capitalize on potential future value appreciation.
Market Hurdles
While the market is buzzing, it’s not without its hurdles. Rising interest rates up until the past 2 – 3 weeks have affect investors’ borrowing power, which has been tempering the bidding fervour. Moreover, persistent supply chain disruptions have led to higher costs for renovation and development, impacting the final hammer price for properties needing work.
Victorious Ventures
Several high-profile auctions have grabbed headlines in August. Notably, a historic manor house in the Cotswolds fetched double its guide price, demonstrating the premium buyers are prepared to pay for unique and well-situated properties.
Meanwhile, a set of city-center apartments with a high rental yield sparked fierce competition, underscoring the ongoing strength of the buy-to-let market.
https://assetsforlife.co.uk/choosing-between-city-centre-apartments-and-suburban-houses-a-2024-guide-for-uk-property-investors/
Looking forward
As we near the end of the third quarter, the property auction market is anticipated to keep up its current pace. The adaptability of auction houses to external factors, such as the holiday season and economic fluctuations, will continue to be instrumental in maintaining activity levels.
The emphasis on digital auctions looks set to intensify, well into 2025. With more innovative technologies being adopted to improve the buyer experience. Sustainability will remain a key factor, and properties that align with this trend are likely to attract increased interest.
Conclusion
The property auction market in August 2024 continues to be a dynamic and vital part of the UK’s property sector.
With robust demand, a shift towards sustainable properties, and the rise of digital platforms, the market is well-equipped to navigate the intricacies of the current economic environment.
Stay connected for further updates as we keep our finger on the pulse of the property auction market and offer insights into the trends and news shaping this lively industry.
The Peaks and Troughs of Mid-August Trading as an Auctioneer
