July Property Auction Market Update

Has The Auction Market Reached A Turning Point?

Introduction

Early summer should be a good time for buying and selling property at auction. But there are a few factors in the market which could make things different this year. Before we look more closely at those factors let’s look at our auction market facts and figures for June 2023 (see last month’s market update here).

Numbers of lots offered declines

Far fewer sellers brought their properties to auction this month. It’s hard to say, however, whether this was due to a reluctance amongst sellers to try to sell or the fact that several large auction houses didn’t hold a sale this month.

The number of lots offered in June at the sales we track was just 2,020 compared to the 3,109 offered in May. More significantly perhaps this was around 10% lower than the average over the last six months.

Sales were broadly balanced between online and live/live streamed with a slight preference towards online. (54% of lots were offered online.)

Who held sales? Which were the biggest?

The biggest sale by lot numbers in the online arena this month was held by the Auction House network which raised around £42m from 362 lots offered at their sales. Around £25m of this was raised in London from 193 lots.

In the live auctions arena Savills raised over £33m from 142 lots offered. Barnard Marcus raised over £28m from 308 lots. Allsop Residential raised over £43m from 162 lots.

Percentages sold hold up overall, but online sales drop

The percentage of properties sold at the auctions we track held up well in June. At 70.4% overall the chances of selling were broadly in line with what any seller selling at auction can expect in any month of the year.

There was a notable difference in the chances of selling depending on whether the sale was online or live/live streamed. The sales rate at live sales was a high 76% but at online sales only around 64% – quite a difference, although it may only be a blip.

As ever there were a few auctions (mainly those held by the smaller auction houses) that sold 100% of their lots. This confirms a very general pattern in the property auctions most months – smaller auctions generally offer a high chance of selling.

Notably this month one auction house only managed to sell 38% of their 80 lots – almost half the average sales rate. Very rarely do the chances of selling at auction drop this low. It underlines that this is a statistic that both sellers and buyers would do well to heed whichever sale they are considering using.

Amounts raised still strong

As might be expected in light of the lower number of lots the amount raised at the auctions we track fell in June compared to the previous month. However it held up well compared to the longer term average with £248.4m raised overall at all sales.

Auction properties getting cheaper?

In recent months the amount raised per sale has been fairly consistent. The average price of a property sold at auction has hovered around £128,500. This figure dropped to around £122,000 in June however.

This is a potentially interesting statistic following three years of consistent property price rises. At around a 5% drop it is broadly in line with the price falls that are being reported in the residential market overall. It might mean that, as many people suspect, house prices are falling at last on a monthly basis. (Then again it might suggest that cheaper properties are being offered/being sold at auction while the higher value properties are not.)

Summary

It is probably fair to say that the property auctions in June 2023 were a little quieter than might have been anticipated compared to an average year. The market has still been fairly buoyant though. Sellers have been selling – although might have raised a little less than they were expecting. Buyers have been buying – and might have got a better deal than they may have thought.

Although it tends to be the case that cash buyers are very active at auctions the continued ramping up of interest rates will certainly be weighing on the minds of buyers and investors who are buying with a mortgage. It will be affecting their interest in buying, as well as how much they are willing to pay.

Based on this month’s returns alone, it could be argued that auction property prices are falling slightly. But, perhaps not quite enough to bring more buyers to the auctions in the hope of getting a bargain. It will be interesting to see if a downturn in pricing accelerates over the coming months and if this helps attract more buyers and/or even dissuades sellers.

As ever, next month’s data will add to the picture. Although summer is never a particularly good time for trend spotting. The market is normally busy in early July but then slows considerably as holiday time arrives and many auction houses don’t schedule any sales.