Property auctions have always been a dynamic aspect of the real estate market. According to the House Buyer Bureau, recent data suggests a change in the auction environment: a movement towards a buyers’ market.

In simple terms, a buyers’ market arises when there are more properties available than there are people wanting to buy. This typically means more choices, better prices, and more negotiating power for the buyer.

Key Statistics

• Auction demand, which is calculated based on the ratio of auctioned properties already sold subject to contract, decreased from 35.3% in 2022 to 29.7% in 2023.
• Properties being listed for auction rose by 0.7% from 1.6% in 2022 to 2.3% in 2023. This tells us that more properties are being presented for auction, but fewer are actually being sold.

Expert’s Take

Chris Hodgkinson, the Managing Director of House Buyer Bureau, offered his perspective on the matter. He observed fewer bidders at auctions, which has impacted the final prices of the properties being auctioned. A significant factor behind this change is the shift in the profile of the typical auction buyer.

While experienced cash buyers remain active, there’s been a reduction in less seasoned buyers who rely on mortgages. This is partly due to the current uncertainties in the market and escalating mortgage rates. Hodgkinson also pointed out an increase in homes that don’t even reach the auction room due to limited interest.

For sellers, the challenge lies in the possibility of their property not selling, which could deter potential future buyers or result in lower offers.

Regional Insights

Where Demand Is Lacking:

• London: Just 15.1% of auctioned properties were sold, indicating a dearth of buyers willing to meet the capital’s high property prices.
• Scotland and the North West: The regions have low demand levels, standing at 23.9% and 25.7% respectively.
• Annual Fall: All regions of Great Britain experienced a drop in buyer interest, but the sharpest declines were seen in Scotland (-13.1%), the North West (-12.1%), and the West Midlands (-10.9%).

Where Demand Is High:

• East of England: With demand at 38.3%, properties in this region are being quickly bought up due to limited available stock, which only forms 1.9% of the market.
• South West and South East: These regions follow closely with demands of 36.7% and 34.2% respectively.

Where Auctioning Is Common:

• North East: The region has plenty of auction stock, making up 5.6% of its housing market. The North West, East Midlands, and Wales also have substantial auctioned stock in their markets.

What’s Causing This Shift?

One potential reason for the cautious approach of buyers could be the rising mortgage rates. When financial conditions are tight, potential buyers may be less willing to take on the inherent risks of buying at an auction.