November Property Auction Market Update

A Market On The Turn?

Introduction

Most property market reports and indexes seem to suggest that the residential property market is on the turn at the moment. After several years of a very buoyant market sales seem to be slowing and prices are on the downturn (if only slightly) in many areas.

Auctions are historically something of a barometer for the property market generally in that they reveal slowing sales and declining prices before the wider market. Yet typically a slowing market is rarely all that bad for the auctions market. While buyers may be more cautious in these markets it usually means that more sellers, not fewer, turn to auctions to sell their properties. Good value can be had, which keeps business in the auction rooms brisk.

With that in mind, do our residential auction market results for October 2023 suggest that the market could be in for a further downturn …. or not?

Number of lots offered drops (but to be expected)

The number of lots offered at the sales we track was down this month, with 2,490 properties going under the hammer. This was well down on September’s 4,000+ properties. This was perhaps to be expected, however, as September is always a busy month and this September was something of a record. In fact the volume of lots offered this October was in line with the average over the last year and in fact pretty much the same as October 2022’s 2,480 lots.

The largest sales were held by Barnard Marcus who raised around £35m from 354 lots offered, Savills who raised around £36m from 161 lots and the Auction House network who raised around £51m from a combined 500+ lots.

Interestingly one of the largest auction houses, Allsop Residential, did not have a sale in October and doubtless this month’s overall returns are lower as a result. Allsop have three days of sales in November – which in itself might prove to be a bellwether of the market.

Percentages sold decline (and notably)

One very noticeable stat. this month was that the percentage of lots that sold at auction was well down in October. Just under two thirds of properties entered into all types of sales actually sold. In particular, only 61% of properties offered at online sales found a buyer. In other words, one in three sellers overall were disappointed on the day.

Both these figures were the lowest recorded since we started tracking sales and contrasted with typical sales rates around 70% or more over the last year. Notably only a handful of auctions managed to obtain an 80%+ sales rate – a rate which has not been unusual in recent months.

Amount raised is stable

As might be expected from the lot numbers the total amount raised this month was well down on the previous month. The amount raised was less than half that raised at September’s auctions. Again this probably shouldn’t be taken as a sign of a market downturn given the very busy September and the fact that a major auction house didn’t hold an event. The £272.5m raised in total in October was about average for the last 12 months, and oddly again (as with lot volume) almost identical to October 2022.

But the average price per sale drops sharply

Another notable statistic this month was a fall in the average sale prices of property at auction in the UK. At just £109,000 approximately per property sold this was the lowest (except for an anomalous figure in February) for the last 12 months – and around a 15% price fall compared to several recent months. In particular, the average price of a property sold at an online auction was only around £99,000 – which appears on the face of it to be something of a bargain for buyers.

Could this mean that property prices are falling? Or could it just be that more cheaper properties (such as smaller buy to lets perhaps) are being sold off this way? It will probably take a few more months of returns (the winter 2023-24 months will be interesting to watch) before any clear trend appears.

Summary

To answer the question, do the auction returns for October 2023 show that the property market is slowing? A fair answer would probably be …. not necessarily.

The sales percentages may suggest buyers are being cautious and auction pricing may suggest good value is to be had. But the lots offered and amounts raised do not suggest a slow down. And nor do they suggest sellers are rushing to sell. These figures are, in fact, in line with the averages over the last year and, uncannily perhaps, similar to October 2022 when the market was still pretty warm (although reeling from the impact of the now infamous mini-budget).

Looking at the market ahead now: After a turbulent year mortgage interest rates seem to be stabilising. This could tempt some buyers and investors to make a move. The Autumn Statement on 22 November will also be very relevant. In the countdown to an election year there are mixed messages on tax cuts, and rumours of possible incentives for home buyers.