ANALYSIS: UK auction houses sold almost 500 fewer properties in February than in the same month last year, when figures were boosted by the impending stamp duty hike for buy-to-lets and second homes.
The overall total raised at residential and commercial auctions last month fell by just over £100m to £571m, a drop of 15% compared with February 2016, according to Essential Information Group.
The residential market saw the biggest dip, with the total raised dropping almost 17% from £484m in February 2016. That spike came just ahead of the 3% surcharge being added to SDLT on buy-to-let and second homes last April.
The smaller commercial auctions market also saw a drop, although it was less severe. The total raised fell almost 12% from February 2016 to £167m. However, figures for the three months to the end of February show a 3.1% rise in total raised and the past 12 months have seen a 2.5% increase.
Overall statistics for UK auctions last month showed a 13.5% fall in lots offered and a nearly 14% fall in lots sold.
John Townsend, auctions consultant at law firm Harold Benjamin, said: “On the residential side of the market, there was a definite surge [in February 2016] in vendors and buyers trying to beat the deadline before the rise in stamp duty came into effect and the punitive treatment of buy-to-let investments.
“On the commercial side, there were early signs of a move by investors from buy-to-let to commercial.
“Neither market has shown any signs of flagging this year, with demand for product continuing to outstrip supply – which, when mixed with sensible pricing and realistic reserves, should continue to show positive signs for the rest of the year.”
David Sandeman, EIG director, said: “Analysing the market’s performance during February over the course of the past decade illustrates that last month’s results are on a par with previous years’ results, and not in the disarray that the percentage falls would at first glance suggest.”
Lots offered and sold were at a similar level to February 2015 and the total raised was up 20% on February 2015 (see graph).
Sandeman added: “Positive gains are evident in many northern regions of the UK for the rolling quarter, where lower house prices mean stamp duty is less of an influence.” The North West performed particularly well.
Savills’ director of residential research, Lucian Cook, agreed that last year was a blip: “We had a big spike in transactions last year in the rush to avoid the 3% stamp duty rise.
“In addition, the buy-to-let lending terms have got much tighter,” he said.
In London, the rolling quarter figures show the total raised at residential auctions down 15.2%, while commercial is up 30%.
Source: Essential Information Group
What the buyers say
Private investor Ray Elliott, who buys mainly residential property, said he expected the figures to bounce back next month. “Auctioneers have had to lower their expectations a tad, and if the government is charging us 3% somebody has to absorb it,” he said.
Elliott said he looks for a price reduction to account for the extra stamp duty when he is buying a property.
Nilesh Patel, a director at commercial specialist Prideview Group, said: “Auction sales rates among the national commercial houses have been consistently around 90%, suggesting buyers’ and sellers’ pricing expectations are in equilibrium – a good sign in terms of the trading conditions for getting deals done.”
