AUCTIONnews UK PROPERTY AUCTIONS ANALYSIS
How the gavel fell: Q1 talks to David Sandeman of EIG about
Where is the residential auction market now?
some small but encouraging signs in the auction room. Lots sold
the rate has gradually eased over the past two years to 73 per cent for Q1 2011.
In this auction market review we are looking at how the first quarter of each year from 2005 to 2011 have fared with four key metrics. These are lots offered, lots sold, per cent sold, and amount raised. It should be noted that the four graphs below are giving the figures for Q1 for each of the years showing and not the full year.
Lots offered
The number of residential lots offered at auction climbed steadily throughout the naughties peaking in 2008. A marked correction and fall was seen in 2009 and this continued through to 2010. Interestingly the first quarter of 2011 has seen the number increase from 2010 by five per cent; possibly as vendors realise that correctly priced lots will sell at auction.
GRAPH 1 LOTS OFFERED IN Q1
7,000 6,500 6,000 5,500 5,000 4,500 4,000
2005 2006 2007 2008 2009 2010 2011
A marked rise in Lots offered in Q1 2011 - good news. GRAPH 3
PERCENT SOLD IN Q1
85% 80% 75% 70% 65% 60%
5,500 5,000 4,500 4,000 3,500 3,000
Again the number of lots actually sold at auction continued to rise up until 2007, the peak of the current property cycle. The graph shows how the number fell away by nearly 20 per cent between 2007 and 2010. The good news is that it has levelled out at 4,070 residential lots sold in Q1 of 2011.
Per cent sold
Interesting graph! Against a 15 year average sale rate of 75 per cent, the peak was in 2006 (81 per cent) and then it fell away slightly in 2007 (78 per cent) and dropped to 68 per cent in 2008. This dramatic fall was partly the result of the expectations of the vendors, still used to the buoyant market conditions of previous years and not re-aligning themselves with the events of Q4 2007. Interestingly the rate picked up in Q1 2009 to 78 per cent, with auctioneers being much stricter on reserves post Lehman, though
GRAPH 2 LOTS SOLD IN Q1 Amount raised
As one would expect this peaked in 2007 (£852M), the peak of the general housing market and then fell away over the next two years to just under £500M for 2009. It has remained steady for the last two years.
Conclusion
As with all sectors of the property market auctions saw a peak in 2007/8 followed by a rapid decline, though the decline for residential auctions has been less marked than with the wider residential market. The past three years have seen lots offered, lots sold and amount raised remain fairly constant with only the per cent sold slipping. I would expect to see gradual improvement over the coming months and years and the market increasingly sees auctions as a trading arena for correctly priced stock.
2005 2006 2007 2008 2009 2010 2011
Sold Lots looking slightly better this quarter... GRAPH 4
Millions 2005 2006 2007 2008 2009 2010 2011 But percentage-wise it’s not quite so good. 62 MAY 2011 PROPERTYdrum
£900 £800 £700 £600 £500 £400 £300
TOTAL RAISED IN Q1
2005 2006 2007 2008 2009 2010 2011 Revenues gradually increasing? Let’s hope so.
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