Search the site

You are here: Home » Auctions » Auctions on the up!

Auctions on the up!

publication date: Oct 3, 2011
Download Print
As we enter the second half of 2011 we can reflect on the first half of the year and see how it measures up against same period over the last six years. David Sandeman, founder of Essential Information Group (which monitors the sale of every single property at auction in the UK), assesses the key auction statistics and gives his insight on the current condition of the residential property auction market and how it might fare in the remainder of 2011 and beyond.

Lots offered

As one would expect the number of lots offered at auction peaked at the height of the property boom in 2007-2008 and the subsequent market correction saw a dramatic fall in 2009. A degree of stability returned in 2010, and the graph below shows us that 2011 has brought with it renewed confidence and growth in the market. An increase of over sevenper cent resulted in 12,156 residential lots being offered in H1 2011, as vendors are becoming ever more aware that that correctly priced lots have a great chance of selling at auction.

Lots sold

Again the number of lots actually sold rose throughout the mid noughties up until the peak of the current property cycle in 2007. The graph shows how the number fell away by around 27 per cent between 2007 and 2010 to just 8,138 lots – the lowest number of residential lots sold at auction since 2003. However this is a comparatively small drop when compared with residential transactions recorded by the Land Registry, where in the same period the volume of sales declined by 50 per cent. The good news is that in H1 2011 residential auction sales rose by over nine per cent to 8,904. This indicates that vendors have become more realistic with their reserves whilst auctioneers have become more selective with their entries, and buyers are increasingly seeing the opportunities that auctions present.

Percent sold
Against a long term average sale rate of 76 per cent, the rate peaked at 78.2 per cent in 2006 before falling to a low of 62.8 per cent in 2008. Since then auction sale rates have remained fairly consistent at around the low to mid 70’s, and the H1 2011 rate of 73.2 per cent backs up the positive signs shown by the lots offered and lots sold graphs indicating a stable market.

Amount raised
As with the other metrics the amount raised for residential property at auction increased steadily throughout the last decade, reaching an all-time high in H1 2007 with over £1.8 billion in receipts.

The property market correction shortly after this period resulted in a decline in property values and a reduction in the number of lots being offered and sold. This is reflected in the graph below, where in 2008 and 2009 the amount raised at auctions for residential property dropped by 28 per cent and 24 per cent respectively. However as the graph shows the market has now stabilised and one would hope that this continues and grows.

All sectors and metrics of the property market saw a peak in in 2007/2008 followed by a rapid decline, and the graphs above show us that auctions fared no differently. However auctions have not experienced the same levels of decline as the wider property market, and indeed the signs from the last couple of years show a stabilising market and in some metrics even an improving one. The final graph, which plots the number of residential sales at auction as a percentage of all land registry sales, shows how the auction market share of residential transactions has doubled from 1.5 per cent in 2006 to three per cent in 2011. I would expect to see this trend continue in the forthcoming months and years as vendors and buyers alike increasingly see auctions as a viable and effective means of buying and selling property.