AUCTIONS
Success in 2011, hope for 2012 Auctions –
Strong 2011 figures from the auction rooms signal hope for the residential investment market, says Chris Baguley, director at specialist lender Auction Finance.
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011 started out subdued but stable in the auction rooms. After the disastrous year the property sector has experienced, the auction industry weathered the storm very well. The market
over the previous two and a half years appeared to even out and by February, lots offered and sold were more encouraging than they have been for a long time. Throughout the economic crisis I was
relieved that the auction rooms escaped the doom and gloom of the property market and actually presented investors with some great opportunities to acquire good quality stock at significantly reduced prices. Attendance figures were strong and some great sales and purchases were being made. I’m not saying the auction market didn’t dip during these years; it did, but it just didn’t suffer to the same extent as the wider property market.
In the first half of 2011, three quarters of all properties offered at auction sold, a seven per cent increase on the first half of 2010, bringing the total number sold to 10,969. This kicked us off to a promising start. Meanwhile the papers were overflowing with negative stories that seven out of ten properties up for sale remained unsold. It was clear – the property sector in general, although picking up, was not replicating the success of the auction rooms. My view of the auction sector, even early on in the year was that it was going beyond stabilising, but improving; the auction rooms were in a stronger position than the traditional property market. The benefit of auction rooms is that in
tough times they were presenting resilient investors and homebuyers with solutions. There’s plenty of well-priced stock for the taking and sales can happen fast, especially for those with the right finance in place.
With auctions becoming increasingly popular more people came to us for funding. So far in 2011 we lent £17m to buyers in 216 transactions, a 34 per cent increase on last year. Loans varied from £25,000 to over £1m, averaging at £74,500. The fact that the number of lots sold at
auction is on the up, is a beacon of hope for the market. Now we’ve reached the close of the year the market in general is starting to follow, it has just been a matter of time. This suggests figures from the auction rooms are a great indicator of the overall mood of the market – we can use them to predict how the industry is shaping up. The key to success is buying properties at the right level and the yield is the biggest influencer, if it stacks up on yield it will sell. There will be no property boom for a long time to come, but with the auction market share of residential transactions doubling since 2006 this is a positive sign.
PROPERTYdrum DECEMBER 2011 57
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