Is There a ‘Summer Effect’ in the Property Auctions Market?

An old adage in the investment business is ‘sell in May and go away’.

But does something similar apply in the property auctions sector? Is the summer a bad time to buy or sell at a property auction?

We’ll offer some thoughts here.

Firstly, why might the season affect the property market and particularly property auctions?

It’s a difficult thing to put a finger on. Several factors could combine to exert an influence, however…

It’s holiday time. People are thinking about relaxing on a beach not doing business. During school holiday times in particular many people are out of the office.

It can take longer to get things done in summer for these reasons. Auction sales have short completion times and this can be tricky to achieve during holiday times.

Auction houses may be cautious about holding auctions in the summer in the expectation that keen buyers and sellers may be fewer, so they may not achieve the best prices. With fewer auctions held there are likely to be fewer properties.

The housing market generally does slow down in summer anyway. Buyers like to go house hunting in spring so they can move in over summer. And in autumn so they can move in before Christmas.

But does the property auctions market actually slow down in the summer?

Let’s look at some statistics:

Essential Information Group collect data on virtually all UK property auctions.

Looking at the last full year of data available, EIG report that around 25,000 lots were offered at UK property auctions, both residential and commercial, in 2021.

The busiest month was September when 2,943 lots were offered. The quietest month was January when just 714 lots were offered. In summer 2021 July was almost as busy as September with 2,693 lots offered but August was the second quietest month with only 770 lots.

Of course, 2021 (and 2020) were anything but normal. Covid impacted the property market. The Stamp Duty holiday, and its wind-down in summer 2021, will also have had an impact.

So let’s look at the last year pre-Covid, 2019. EIG report that around 28,500 lots were offered at UK property auctions in 2019.

The busiest month was February when 3,394 lots were offered. The quietest month was January when only 456 lots were offered. July was almost as busy as February with 3,306 lots offered but numbers slumped to 864 in August.

A look at previous years’ data from EIG reports broadly similar seasonal patterns too.

Lots offered at auctions are not the complete story, of course

HM Land Registry figures for all property transactions, not just auction sales, tend to disprove the idea that sales fall off in the summer. In this report they say that ‘residential transactions have historically followed a seasonal trend in which market activity increases during summer months.‘

For example, this analysis of official figures shows that in 2021 completed transactions in England and Wales peaked at 147,827 in June. They were lowest in October with just 47,057.

Pre-Covid patterns are similar: In 2019 completed transactions peaked in August with 83,384. They were lowest in January with just 57,204.

So to answer the question: How deep is the summer effect on the property auctions market?

It’s very important to bear in mind that the property market, and so the property auctions business, varies from year to year. What happened in the past will not necessary happen in the future. Covid has disrupted the property market, and by implication the property auctions market, over the last couple of years.

However, based on the fairly limited data we have looked at the answer is, yes, there is an effect. But it is not exactly the summer slowdown that many people might expect. When looking at lots offered at property auctions business in July is generally brisk. The auctions are slow in August but this is quickly made up for with a large numbers of lots in September. And January is perennially the quietest time for property auctions and not the summer.

When it comes to overall property sales completed the reverse is actually true, however.

More sales tend to be actually completed in the summer than in the winter.