UK property markets are seeing a significant increase in property auction opportunities over the last year, reflecting a change in motivation and strategy amongst sellers. This shift toward auction sales seems to be an effort by sellers to speed up the process and find greater security in their transactions, particularly in the current volatile market situation. The data provided by property industry professionals outlines an in-depth analysis of this emerging trend.
Huge Spike in Property Auction Activity
According to recent statistics from EIG Property Auctions, there has been a jaw-dropping 51.5% increase in the number of residential property lots coming to market from August 2022 to August 2023. My Auction, an online property specialist, corroborates these figures. They have experienced a notable surge in lots offered for sale post-September as children returned to school. The increase in call volumes they’ve been receiving from potential sellers, both directly and through their network of independent estate agents across the UK, is considerable.
Why the Auction Route?
The main catalyst for this trend appears to be the growing interest of sellers in securing swift sales of their properties while ensuring the deal is secure, considering the current market turbulence. EIG data reveals that the number of residential lots sold year on year mushroomed by 39.7%, with the total amount raised escalating by 29.4%.
This rise is in stark contrast with the sputtering traditional property market. Zoopla data suggests that housing sales expected to finalize during 2023 are projected to be a dismal 21% less than those in 2022 – a low last seen over a decade ago in 2012.
Overpricing in Current Market Conditions
My Auction has identified that one of the prevalent reasons for the market’s sluggishness is discrepancy in price expectations. Sellers seem slow to adapt to the ever-changing market conditions, often pricing their assets higher than what might attract potential buyers. Rightmove’s data lend credibility to this theory, indicating that many sellers hold over-optimistic pricing anticipations or have been provided with inflated price suggestions from agents. Their data revealed a whopping 36.3% of properties sold via private treaty methods had to resort to at least one price drop – the highest instance since January 2011.
Expert Insights
Stuart Collar-Brown, the founder and director of My Auction, spoke of the intensified urgency he had noticed among sellers. “There has been a huge increase in enquiries from sellers, all eager to secure a sale of an existing property already on the market. It is unmistakable that more sellers are turning towards auction sales due to the certainty and security they offer in this unpredictable market,” he remarked.
With more rate rises looming and Christmas around the corner, sellers are choosing auctions over traditional methods more than ever over the past three to four years. “Sellers must heed market signals before an auction and accept that if the market deems their price too high within the initial marketing period, they must reassess and adjust,” Collar-Brown advised.
He emphasized that if there are potential buyers offering close to or matching the guide price, sellers should seriously contemplate accepting these proposals. “If they hold off on a good offer now, in three months, given the current market trends, they could be receiving 10% or more less,” Collar-Brown cautioned.