The biggest factor in the growing success of the West Midlands auction market has been the change in mindset of people looking to sell.
In the past five to 10 years, auctions in general have moved far more into the public domain. Programmes such as BBC’s Homes under the Hammer have opened up auctions to everyone. Many people now seem more comfortable with the idea of buying or selling at auction.
But the mindset change I referred to earlier is that more and more vendors now seem willing to consider auctions as a first resort, when in the past many people would consider auctions only as a last resort.
This change in attitude has combined with the strides made in electronic marketing, including websites for mobile phones and tablets, electronic catalogues, electronic legal packs, electronic databases and e-mail alerts.
So a change in attitude to auctions has been met simultaneously by an improvement in the ability to reach out to a large number of people instantaneously and target those who have already registered an interest in buying property at auction.
And as a consequence of this, the more established and more digitally efficient auction houses such as ourselves are tending to rise to the top, both in the West Midlands and nationally.
Auction rooms with standing-room-only are already seeing 85% or more sales rates in 2015 and are proof of the surge in interest in auctions and of the improvement in the market.
During the past five years, which have been among the most challenging times for the property industry in many decades, our auctions have grown from offering 468 lots and raising £39.3m in 2010 to offering 679 lots and raising £61.9m in 2014.
This equates to an increase of 45% in the number of lots offered and a 57% increase in the total raised. This dramatic rise has occurred during what would be described at best as a very flat market.
More local authorities in the Midlands are choosing to use auctions to raise cash from their property assets, both buildings and land, and all the ingredients are there to create a thriving regional auction market.
Local authority stock is perfect auction fodder. When regular buyers realise that we are appointed auctioneers for the majority of West Midlands authorities, including Birmingham, Sandwell, Wolverhampton, Solihull and Walsall with ad hoc lots from Wyre Forest and Dudley, they know what to expect and that we will keep them informed of what is coming up in future auctions.
What they can expect to see being offered is surplus local authority stock from every property sector, much of it needing significant improvement, that is priced realistically and in demand. When you add up all the elements in the equation, the result is premium prices attained.
At a stroke, in property timescales, a local authority has converted what it may have viewed as a liability into much-needed cash.
Another major trend we are seeing is the appearance of higher-value properties in West Midlands auctions.
There used to be an invisible price ceiling in the West Midlands of around £250,000 10 years ago and £500,000 five years ago; properties priced above these amounts would sell only at London auctions.
In the past two years, we have seen a move to bring higher-value properties to our auctions and are now selling lots for up to £750,000 or more.
And although the economy is seeing signs of recovery, behind the scenes there are still many instances where companies in distress are looking to realise cash quickly – with the keen support of their bankers.
These “consensual sales” are good for both parties. There is a higher degree of certainty of a quick and easy sale in a short timescale and there is growing evidence that banks are keen on auctions as a means to an end.
So it has been a perfect storm of factors that has driven the growth of the West Midlands auction scene – no one area has seen phenomenal growth but the sum of the parts has led to astonishing growth to date.
Rory Daly is senior partner at CPBigwood Chartered Surveyors and Auctioneers
