Cheffins Property Auctions on Market Observations, “The Flight to Prime” and the Strength of Auctions in 2024

We put some questions to Ian Kitson – director of property auctions and valuations at Cheffin Auctions, specialist in rural, residential and commercial property sales across the UK.

What kind of trends has Cheffins been observing in the first quarter of 2024 residential auction sector?

The first quarter of 2024 has started in a similar way that 2023 ended. The market seems a mix of caution and optimism, and as is always the case when there are some mixed opinions, there is the natural ‘flight to prime’.

This means that the best properties in the most desirable locations are selling, and selling for exceptional prices, as buyers see safety in these lots.

Our March auction typified this, with central Cambridge lots all soaring over their guide prices with plenty of competition for each lot.

Similarly, the agricultural/amenity land market remains strong, as does the speculative land market. The caution appears to be in some of the secondary locations, where buyers are still keen to buy, but appear to need to transact at prices that build in plenty of safety.

What are your predictions for the residential property auction market in the next year?

Our residential sales teams are all reporting strong levels of activity in the private treaty market, and the auction sector seems to replicate this.

The recent small decline in interest rates seems to have given buyers a little reassurance that while rates might still be higher than they’d like, there is some optimism that they might be coming down in the longer term and buyers are therefore happy to take on debt accordingly.

If this trend continues, then 2024 should see plenty of activity.

What do you perceive to be the main risks and challenges affecting the residential auction sector currently?

Confidence is always key! 2024 is unlikely to be any different to any other year, in that the market will always revolve around much wider macroeconomic factors.

Energy prices seem to be coming down a little, as do mortgage interest rates, and that’s encouraging buyers and sellers, however demand can change at any moment.

That said, there will always be a core of the residential market that is driven by people who need to move regardless of whatever else might be happening – whether these are families that suddenly need more or less space, changes in jobs that necessitate a house move, or some of the other life events that just can’t wait, this core of the market has to transact and often doesn’t have the luxury of dictating when, which always adds fluidity to the market.

Are there any geographical trends that you’re noticing?

As above, there has been a noticeable ‘flight to prime’ with the best properties in the best locations selling as well as (and possibly even better than) ever.

What are your general thoughts surrounding the current macroeconomic environment and how they may impact the residential auction sector?

The macroeconomic environment is very fluid at the moment, both at home and abroad. The UK economy seems to have stabilised and avoided recession, which is certainly a piece of good news and will no doubt give the market confidence.

But the wider world seems endlessly chaotic, and we’ve seen in recent years that anything can happen in that regard, both good and bad!

What are your thoughts on a potential Labour government presiding over the economy and how that may impact residential property investment and development in general?

This is a potentially difficult question to answer as its not entirely clear what the Labour policies are, but I suppose that could be said for the current Government too!

That said, General Elections and Government changes have historically added an element of doubt to the market, but with so many Government changes and re-shuffles in recent years, you start to wonder if the effect might be more blunted as the market is becoming more used to them.

Why do you feel the property auction sector will thrive this year?

In unpredictable times, property auctions often come to the fore.

Sellers who need to determine the value of hard-to-price assets, those who need to sell in a secure timeframe, clients needing transparency, and of course those who need an effective way to bring to a close the bidding on a popular property, will all continue to use auctions as an effective way to achieve these goals.

We have also recently seen a growing number of enquiries from private treaty vendors who are looking for a solution to the ever-expanding conveyancing timescales. For these and many other reasons, we hope that 2024 will be a busy year.