Auctions on the up
David Sandeman of Essential Information Group, reviews residential property auction data from around the country.
Residential market stealing auction spotlight
The UK property auction market has marked another robust month in September 2023, sustaining a growth trajectory observed over the past three months.
Essential Information Group’s latest data reveals noteworthy trends in both lots offered and sold. David Sandeman, Director of Essential Information Group, said: “The figures from September underscore the resilience and buoyancy of the UK property auction market. This consistent growth trend is indicative of a market that remains strong despite external uncertainties.” In the national overview, the total lots offered reached 4,175, showing a substantial 16.7% increase from the corresponding period last year.
Similarly, the lots sold saw a commendable rise of 13.7%, totalling 2,971. However, the percentage sold, while slightly decreased from the previous year, remains robust at 71.2%.
The market’s overall realised value stands impressively at over £572.9 million.
Breaking down the figures, the residential sector demonstrates robust performance, with a 20.8% increase in lots offered and a 17.9% rise in lots sold.
On the other hand, the commercial sector experiences a decline in both lots offered (5.1%) and lots sold (8.7%).
The landlord exodus influence?
The question on many minds was whether the influx of auctioned residential properties was attributed to a wave of tenanted stock. Many speculated that landlords, seeking to divest their portfolios, were contributing to this surge.
Many speculated that landlords, seeking to divest, were contributing to this surge.
EIG conducted an in-depth review of residential stock, categorising properties into three main groups: Dwellings (including houses, flats, HMOs, and blocks), Land (comprising land, sites, and plots), and Others (encompassing garages, ground rents, and other residential property types).
The analysis spanned across two periods, comparing January to July of both 2022 and 2023.
Houses emerged as the frontrunners in terms of growth, experiencing a staggering 31% increase in listings. This surge represented a considerable 58% of the total growth in residential entries. Flats saw a 25% increase, accounting for 20% of the total residential entries. The category of land also marked a growth of 25%, contributing 15% to the overall residential growth.
While the remaining property types experienced only nominal increases, the dominance of houses and flats in shaping the growth narrative became evident. In fact, Dwellings (houses, flats, HMOs and blocks) collectively constituted a significant 82% of the total residential growth over the analysed period.
Tenanted vs. vacant dynamic
To shed light on the role of tenanted properties in this dynamic, EIG drilled down further to ascertain the distribution between vacant and tenanted entries, providing a clearer picture of the motivations driving properties to auction.
Interestingly, tenanted properties demonstrated a level of stability, exhibiting only a marginal increase. This growth contributed to just 6% of the total residential growth.
In contrast, vacant houses emerged as a pivotal factor, witnessing a substantial rise of 57%. Vacant flats followed suit, marking a 15% increase. Collectively, vacant Dwellings represented an overwhelming 75% of the total residential growth.
The data suggests that landlords are increasingly opting to sell properties once tenants vacate, rather than investing in costly refurbishment. This approach may stem from limitations in accessing funds for renovations or a strategic decision to avoid further financial commitment.
In summary, the surge in properties making their way to auction, particularly in the residential segment, is driven by a number of factors including landlords divesting, the economic realities of mortgage expirations, and an increasingly discerning buyer market.