Harman Healy’s most recent auction set the trend for the rush of auctions held at the end of November.
The sale realised £8m on the day, rising to more than £9.5m with the inclusion of prior sales. However, the 14 lots thus sold out of the 105 in the catalogue was about half the number usually sold at that stage.
Nor was it the only auction statistic down on Harman Healy’s previous record. Some 28% of the lots on offer failed to sell, an increase of 13% on the failure rate of the 108-lot October auction and of 16% on the 105-lot September auction. The final total of some £9.5m in this most recent sale compares with £13m achieved in both the previous auctions.
But, from a long-term perspective, it was not a decline as such. In 1986 only three of the seven auctions which were held cleared the £9m mark. This auction marked a return to that sort of level, although it begs the question of whether the decline ends here or is going to continue into the new year.
The lots that failed to sell in the commercial sector were not major properties of any significance, but their failure was unexpected.
Not even the carrot of full vacant possession on a freehold five-storey ex-industrial building in London, considered to come under Class B1 of the Use Classes Order and so permitting change of use to offices without planning consent, could tempt the bidders on what appeared to be a very promising site.
What is significant is that it is located at 8 Baltic Street, EC1, only a few yards from Old Street in a prime City fringe location, a district which up until a few weeks ago was seen as being the next area of expansion for an office-hungry City. The 6,144-sq ft site is still waiting for a buyer prepared to pay a minimum of £850,000.
The collapse of demand for vacant properties in north London seemed to be confined to the tattier areas of the outer suburbs, but Harman Healy witnessed its spread to what were once considered safer areas.
A four-bedroom mansion at 44 Winnington Road in Hampstead Garden suburb, London N2, was the auction’s most spectacular victim of the advance.
Offered with full vacant possession, the two-storey detached double-fronted property has planning approval for an extension which would provide it with eight bedrooms and five bathrooms. But the promise of luxurious profits from luxury residential investment has lost its pulling power: the property was withdrawn and it has yet to attract a buyer with at least £825,000 to spare.
The failure of such properties confirms the trend that first manifested itself soon after the new era of the stock market rollercoaster burst upon the market.
It began with properties at the very top end of the market, such as 54 Cumberland Terrace, Regent’s Park, failing to sell, as we reported on November 14, and extended towards more modest properties, illustrated by the 65% failure rate at Mann’s November auction.
Now major auction houses are feeling the pinch: Barnard Marcus found themselves selling only four of the 19 commercial properties on offer at their last auction.
Prices being achieved are declining to a level that, before the boom of the last two years, would have been quite respectable. Commenting on his sale, Harman Healy auctioneer John Barnett pointed out that this depression was following an unpredictable cycle. “During the mid-1970s property crash I was regularly holding auctions that achieved 100% sales. Successful auctions are not out of the question provided that vendors adjust their expectations.”
But to what are expectations to be adjusted when the joker in the pack this time around is a stock market that can plunge 70 points in a day?
