Residential sales and tenanted properties continue to account for the majority of lots sold in the auction market, despite rising interest rates, upcoming legislative changes in the rental sector, and the Budget.

This is according to the latest quarterly insights from Essential Information Group (EIG), which reports that 1,075 lots were sold in Q3 2024, up 13% on Q2 and 53% year-on-year.

In contrast, commercial and mixed-use properties have shown more subdued activity, reflecting ongoing recovery challenges in these sectors due to post-pandemic adjustments and fluctuating demand.

Average sale prices and yields have dipped slightly compared to the same period last year, but are showing positive signs of recovery overall, emphasising investor confidence and stable rental income.

Market conditions making an impact

The report also analyses auction activity around key political and economic events.

Sales activity for the Spring Budget peaked significantly at four weeks prior and remained elevated leading up to the announcement.

Buyers and sellers rushed to finalise transactions before tax deadlines and the increase in Capital Gains Tax.”

This buoyancy was likely driven by the proximity to the financial year-end, as buyers and sellers rushed to finalise transactions before tax deadlines and the increase in Capital Gains Tax.

In contrast, the Autumn Budget, typically announced in late October, reflected a more subdued sales pattern post-announcement. Sales peaked at one week prior before tapering off and stabilising. This trend aligns more with seasonal factors, as November traditionally being a quieter month for auctions ahead of a busy December.

Interest rate changes appear to have only a nominal impact on auction sales, however. Rate increases show a steadier, more predictable response, with only a modest drop in sales in the week after any rises.

Rate decreases appear to trigger an immediate spike in sales, but this information is obtained from a smaller dataset making the observed patterns less representative of typical market behaviour.

The regional picture

Regionally, there are stark differences in results up and down the country. While the number of lots sold in London are up compared to last year and last quarter, the average sale price is down on Q2 but up on the same period last year. Yields have taken and downward turn too.

In the North West Home Counties and East and West Midlands, lots sold and sale prices are up across the board, but these regions have also seen a decrease in average rental yields.

While analysing the significance of this data, though, it is imperative to consider the volume of lots being reviewed, especially where there are comparatively smaller datasets at play, as is the case with Scotland and Northern Ireland, for example.

David Leary (main image), Director at EIG, commented: “Rising yields and strategic adjustments to changing tax policies have played a significant role in sustaining buyer interest, even in the face of rising borrowing costs. Legislative changes, from the Tenant Fees Act 2019 to upcoming reforms like the Renters’ Rights Bill, continue to shape the market, prompting shifts in property supply and influencing investor priorities.

Looking ahead, the market remains robust, with opportunities to capitalise on shifting trends.”

“Looking ahead, the market remains robust, with opportunities to capitalise on shifting trends. Whether its properties offering unique charm, investment stock responding to regulatory changes, or broader economic forces shaping buyer behaviour, the insights provided here aim to help you navigate the complexities of the property auction market with confidence. As we transition into the new year, the sector is set to evolve further, presenting both challenges and opportunities for stakeholders across the market.”

Read the full report here.