New research has revealed that fewer buyers are taking a chance on auction properties, despite an uplift in the number of sellers looking to utilise auctions as a route to help sell their home quickly in cooling market conditions.
House Buyer Bureau analysed the current auction market landscape looking at both the level of for sale stock heading to auction and the appetite amongst buyers based on the proportion of stock that has sold subject to contract.
The research shows that in a cooling market, more sellers are heading to auction in an attempt to sell their home swiftly before house prices decline any further, albeit homes sold at auction remain a small percentage of total for sale stock.
Currently, 2.3% of all homes on the market across Great Britain are heading to auction. This marks a 0.6% increase when compared to this time last year and while that may seem marginal, it equates to an increase of almost 6,000 more homes.
The North East ranks as the nation’s auction hotspot, where 5.6% of all homes listed for sale are selling via property auctions. The region has also seen the largest annual increase at almost 1%. The North West (2.9%), Wales (2.8%) and the East Midlands (2.8%) are also home to some of the largest proportions of for sale stock opting to sell at auction.
However, while there may be more sellers heading to auction, the research from House Buyer Bureau shows that there has been a reduction in buyer appetites. Currently, 29.7% of all homes heading to auction have been sold subject to contract, a -5.7% reduction when compared to this time last year when over 35% were selling.
Scotland has seen the largest reduction in buyer appetites for auction property purchases, down -13.1% annually, with the North West (-12.1%) and West Midlands (-10.9%) also seeing double-digit reductions. In fact, just one region has seen auction buyer demand levels increase over the last year and that’s the South East, with a 6.7% uplift.
Managing Director of House Buyer Bureau, Chris Hodgkinson, commented:
“What we’re currently seeing with respect to auction property sales is far fewer interested parties than previously. This naturally means fewer bidders, with properties achieving less when the hammer does fall compared to this time last year.
The profile of the auction buyer has also changed due to heightened levels of market uncertainty and increasing mortgage rates, with a reduction in the number of less experienced, mortgage backed bidders.
While the more experienced cash buyers have remained, what these figures don’t highlight is the higher level of homes that fail to even make the auction room due to a lack of interest.
The current challenge facing sellers is that should their property fail to sell, this could further deter potential buyers, or at best, cause them to come in with an even lower offer. With the current outlook unlikely to change anytime soon, we expect the auction market will remain fairly subdued over the mid-term, at the very least.”
One Response
Buyers should be rightly wary and concerned about properties going to auction. Why is the property at auction? Are the sellers trying to hide something? Are there title issues? Are there survey issues? Then there are the additional fees; engrossment fees, hiked search fees, auction fees etc. I came across one case where an agent wanted to do the exchange themselves (pre-auction), without the buyer taking legal advice, without doing any due diligence and lo and behold the contract pack was substantially defective. Not to mention the thousands in additional fees they took directly from the buyer without any kind of agreement or reservation form being signed. I do not trust auction matters.