Established UK auction houses are enjoying 90% success rates. Catalogue downloads are at an all-time high and viewings are increasing along with pre-auction offers. This year, the strong are getting stronger.
We are also seeing premium prices being achieved, often for considerably more than the perceived market value. For those who remember the dark days of the downturn, when the fight to reach a reserve was where the auctioneer earned his crust, this is both a welcome and a refreshing change.
Our latest auction on 22 October witnessed the nearest we have seen to “panic buying” at an auction, with buyers turning up clearly determined to be the successful bidder. It is a long time since the early bids soared past the reserves so quickly – and in some cases where we knew there had been fierce pre-auction interest, the opening bids were pitched well above the reserve and guide prices.
The golden rule for buying at auction is set your limit and be prepared to walk away, but in many cases there is clearly a great deal of flexibility being employed.
One of the main reasons that success rates for vacant residential properties at auction is in the region of 90-95% is that agents are experiencing a reduction in new stock coming to the market. Due to this, the biggest challenge facing all residential agents is new instructions.
The knock-on effect of this has been that some of the traditional purchasers who would normally buy properties for their own occupation via private treaty agents are turning to auctions because generally there is not enough stock on the market to meet demand.
The property sectors that performed best in our October auction were vacant residential, residential investments, land and development sites, and ground rent portfolios, which all exceeded 90%. Vacant commercial lots, on the other hand, achieved only a 73% success rate at this auction.
However, while our commercial investment lots did not perform as well in our auction last week, that has not been the case throughout the year.
One sector that is definitely booming is former pubs, which always tend to sell well at auction.
They usually occupy large sites with substantial car parks, and can be suitable for redevelopment for a variety of different purposes and development configurations.
Of course, a “former pub” by definition suggests they are considered no longer suitable to be utilised as a pub and this means that what was once a vital amenity to the community – and may be the only pub in the village – is no more.
The truth is that pubs have been in long- term decline. There were 99,000 pubs in 1905 but just 77,500 by 1935. There were still 58,200 public houses in 2006 but now it is well below 50,000.
Ministers have cut business taxes for pubs and armed people with the power to list their local as an asset of community value. People who do so are then given six months and the support they need to organise a community bid to buy it should it be put up for sale.
Very few community bids make it over the finishing line. One glorious exception, and probably my favourite pub auction disposal, is the Hollybush Inn in Seighford, Staffordshire, which was bought by the villagers who all clubbed together to save the only pub in their village. Cheers! And large ones all round.
But for pubs that are not rescued, there is always the opportunity for someone to build much-needed one- and two- bedroom accommodation, which can sometimes be the deciding factor in whether young people ever have any chance of living in the sought-after village in which they grew up.
From our five auctions this year we have raised £65.6m, which is already £3m above the 2014 total. We still have one major auction to come and so we are on track to raise 25-30% more in sales than we did last year.
This goes to show how strong the auction market has been in 2015 and what a difference the higher percentage success rates and higher sale prices achieved are making to the results of the most established auction houses.
