Residential auctions in slight bounce-back after months of decline

According to auction database the Essential Information Group (EIS), there were 1,969 residential lots put up at auction in the last month, 1.1% fewer than in the same month last year, when it was 1,990 lots.

This compared with a 6.7% year-on-year dip in October and a 5% fall in the month before.

The number of residential properties sold however, fell 4.7% on last November – from 1,508 to 1,437. Despite this, revenues were still up 7%, from £239m to £255m, according to EIG.

Overall, the number of commercial and residential properties put up at auction were down 7.6% in November to a total of 2,163, while lots sold fell more than 10% to 1,591.

This followed a decline in October of 4.1% and 3.3% respectively, against the same month last year.

Online lender LendInvest recently suggested auction buyers were having problems completing deals because of the finance available to them.

Chief commercial officer Matthew Tooth said: “A significant proportion of the deals that brokers bring to us are for purchases agreed at auction.

“In these cases, our brokers’ clients too often struggle with the same issue: their lenders can’t meet the demands to get their loans completed in time.”

But EIS managing director David Sandeman said: “These results are indicative of the market’s form over the last six to nine months, and are perhaps unsurprising given that the economic and political backdrop has changed markedly during this period.”

In particular, the market had been affected by changes to the Stamp Duty in April, when a 3% surcharge on second homes was introduced, followed by the announcement of cuts to landlord tax relief. Brexit also had an impact on property sales.

In addition, from early next year the market will face tougher underwriting standards from the Prudential Regulation Authority, particularly for those considered portfolio landlords, with four or more properties.

However, EIS’s figures also showed that over the year (December 2015 to November 2016), there were 3.2% more residential properties put up for sale at auctions than in the year before (27,697). The number of homes sold was also up 2% (20,814) on the year before, while the amount raised from residential auctions was up 4.6%.

“It would be a brave man to predict what the future holds in 2017,” Sandman said, “but one can be sure that auctions will continue to provide a quick, transparent and effective means of buying and selling property.”