June Property Auction Market Update

Sellers Keen, But Are Buyers Being More Cautious?

Introduction

May is usually a busy time in the auctions market, and so May 2023 proved to be. The auction houses did sterling work in managing to get sales organised and lots processed and listed although a succession of bank holidays did their best to disrupt things.

There is one very relevant statistic to report this month however – more about this shortly – that suggests buyers might be exercising a little more caution.

A record number of lots

The 3,019 lots offered at the sales we track was a record for recent months. Although this only just topped the February and March figures this was almost twice the number of lots offered in April.

The auction houses we track managed to organise over 40 sales, which is another record compared to numbers over the last few months.

Who held sales? Which were the biggest?

Despite the trio of bank holidays in May the vast majority of auction houses held a sale this month. The sales were broadly split equally between online and live/live streamed sales.

The Auction House network offered the largest number of lots at 638 of which Auction House London accounted for 224 properties. Barnard Marcus offered 278 lots, McHugh & Co. offered 245 lots and Savills offered 239 lots.

The great online vs. live question

Interestingly, one of the larger auction houses, Allsop Residential, held a live sale for the first time in three years in May after switching to the online model during Covid. Bidders were able to compete in-person, online and via telephone for the lots that went under the hammer. The sale raised £46.5m from the sale of 135 lots and yielded a strong success rate of 80%. Allsop say this was their most successful residential property sale on the day of the auction itself in recent years.

Although one sale does not make a trend the strong sales rate might suggest buyers seem to like the ability to bid by a range of different methods including in person.

Allsop’s next sale is also planned to be in-room but the subsequent one is online

Amount raised also set a new record

The amount raised at all types of auction sale also set a new record over recent times. The £390m raised this month topped the £385m raised in March, and was almost double the amount raised in April. Again, the amount raised was broadly equally split between online and live sales.

Interestingly, while official data suggests house prices are dropping at the moment, this doesn’t seem to be reflected at auction. The average value of a property sold at auction was broadly the same as the last few months at approximately £129,000.

Percentages sold drop

The percentage of total lots which sold at the auctions we track set another record over the last year. But this time a lower one.

The chances of selling dipped to 68.5% overall in May, although the chances of selling online and at a live sale were broadly the same. This figure was just slightly less than the percentage sold in December 2022 which is traditionally a slowish month.

There were a few sales which managed to sell 80%+ of their lots but also quite a few where less than two thirds of lots offered in the sale actually sold.

This percentage sold dipped just below what, based on our statistics, is pretty much the benchmark chance of selling at auction of 70%. More notably though, this reduction in the percentage sold reversed a recent trend for the chances of selling at auction to improve – they reached almost 75% in April.

Summary

In summary, the property auctions seem to be firing on all cylinders at the moment. There are plenty of sales and plenty of lots. Sellers seem keen to sell and the average amounts raised do not seem to give any hint that they are slashing their reserve prices in order to do so.

Could auction buyers be starting to become more cautious, however? The fall in percentages sold is in the scheme of things only a small reduction perhaps. But in practical terms it means around 150 properties which would have sold in April didn’t sell in May – almost a whole auction’s worth of unsold properties.

Could this reduction in the sales rate at auctions be just a blip or the start of a longer term trend? It is early days. But it is just possible that uncertainty over the direction of property prices and also over the cost of borrowing in the medium-term could be starting to weigh on buyers’ minds when they decide whether to bid and how much to bid at the auction.

Looking ahead, June can also be a busy month at the auctions before things start to slow down over the summer holiday period. However it will still be very interesting to see what happens in June and particularly in July and August this year.