Recent months have seen a dramatic escalation in the number of lots appearing in residential auctions. According to the latest data from EIG Property Auctions, there’s been a staggering 51.5% climb in the number of lots submitted from August 2022 to the same month in 2023. But that’s not all. The figure that really turns heads is the 39.7% hike in residential lots actually sold year-on-year, with total funds raised through these auctions jumping by 29.4%.
This trend becomes even more pronounced against the backdrop of a report from Zoopla, indicating that private sales — the traditional route of property transactions — have plummeted by 21% over the past year.
Unravelling the Auction Appeal
What’s behind this auction allure? Stuart Collar-Brown, founder and director of My Auction, believes it’s a reaction to overambition in private sales. “We’ve been inundated with enquiries from sellers, each desperate to lock in a deal for properties that have lingered on the market without success,” he explains. “What we’re witnessing is a palpable market shift, marked by a growing sense of urgency among sellers drawn to the security and immediacy that auctions offer.”
Collar-Brown highlights the broader context, pointing to looming interest rate hikes and the festive season just around the corner. “Opting for an auction is gaining traction like we haven’t seen in the previous three to four years,” he adds.
Facing Market Realities
The current market dynamics are unforgiving. If a property is deemed overpriced in the initial 7 to 10 days of listing, sellers have little choice but to concede to market pressures, recalibrate their expectations, and re-enter the fray.
What auctions present are buyers ready to commit, prepared to match or come close to the guide price, and, crucially, willing to cement the deal with an immediate exchange of contracts backed by a non-refundable 10% deposit. For sellers, this scenario poses a compelling proposition.
Collar-Brown issues a stark warning for those hesitating to take such offers: “Foregoing a sure opportunity now could very well translate into a value decrease of 10% or more in just a quarter, judging by the current buyer behaviour.”
A Shift in Strategy for Sellers
This trend underscores a critical shift in strategy for homeowners and investors. The traditional wait-and-see approach of private treaty sales is losing ground to the allure of auctions — a domain once reserved for only the most distressed or unique properties. Today, auctions represent a haven for sellers seeking certainty in an increasingly unpredictable market.