Property types and house hunters fuel demand at property auctions..
The property types available at auction has changed in recent years.
What property types sell well at UK property auctions is no longer dependent on bargain hunters or those looking for 'something special'.
Traditionally, the ideal property for an auction room is any property with unique aspects. These types of properties attract a lot of interest, making it tricky to estimate a final price. These types of property may even have an auction held specially for one lot! Today these make up a very small proportion of the properties sold at auction.
The property types going through the sale room have always been a mixed bag. Yes there were unique/exceptional properties, but also many properties which appealed to specialist buyers (those with “problems”). Also many run of the mill properties and those for quick disposal. Many properties for quick disposal come to the sale room due to reposession or bankruptcy.
Also some sellers have to demonstrate that they are selling to the highest bidder - making auctions the obvious choice. These include blue chip companies and government-related bodies.
Property bargains galore then..?
Somewhere along the way property auctions acquired the reputation for being the place bar none to pick up bargain properties. To some extent the British love affair with property was always there. But the boom of the late 1980s fuelled appetites for profits and panic buying. And the trend that began with Changing Rooms through to Property Ladder and Homes Under the Hammer attracted a new type of buyer to auctions – hence property auctions are no longer just a ‘trade’ market.
But don't just take my word for it. In April 2005, Gary Murphy of auction house Allsop, was quoted in the Evening Standard saying, 'Anyone can come along and get involved in an auction. We tend to get experienced investors looking for a buy-to-let opportunity or to do up a property to sell on, but we also get a lot of people attending for the first time looking for somewhere to live'.
Throughout the 1990s to the present day, as house prices outstripped wage inflation, many buyers needed to find creative ways to get their hands on an affordable house. And for some that means considering buying a house at an auction.
Property types have helped fuel demand
The different property types going through sale rooms have undoubtedly been influenced by demand. This in turn has tended to increase both the number of properties sold at auction and prices.
For example, according to Essential Information Group, who provide data on the majority of UK property auctions, August 2006 (traditionally a quiet month in the auction calender) saw a 39% increase on the number of lots offered compared to the previous year. The total value of lots sold rose a staggering 66%!
Of course you'd need to look closely at the results of individual auctions to see what property types are selling well. I recently watched a one bedroom flat sell for £15,000 more than an identical flat sold through an estate agent two weeks previously. In fact we know property investors who will now only buy auction properties if they can get a pre-auction offer accepted.