Property Auction Insights
December 2023
2023 has indeed been a rollercoaster ride for the property auction scene. With house prices taking a dip, success rates on the decline, and an unprecedented surge in entries, dissecting the data becomes a crucial endeavour. In this conclusive edition of Property Auction Insights for 2023, our focus delves into the mysteries surrounding withdrawn and unsold properties, aiming to uncover the reasons behind the shifts in the auctions arena.
Furthermore, we've enriched the regional statistics in this report by incorporating yield data on a quarterly basis. This addition provides seasoned investors with valuable insights into the current landscape, offering a clearer view of the opportunities that abound.
Focus on: The Dynamics of Property Relisting
In the past year, the success rates in auctions nationwide have exhibited a noticeable decline from their previous peaks. Concurrently, with a national downturn in house prices, our focus turned to unravelling the dynamics unfolding at the auction rostrum and understanding the underlying causes.
This quarter's insight is aimed at addressing pivotal questions: Was there a genuine surge in the number of properties being auctioned, or was it a result of an influx of repeat entries returning to the market? Additionally, we delved into the impact of repeated entries and reduced guide prices on the final sale prices of these properties. We also explored the frequency of appearances and the time intervals between them required to secure a sale.
This scrutiny holds significance for both sellers and buyers in the auction arena. For sellers, this Insight provides valuable insights into the duration of a successful sale and underscores the importance of accurately setting the guide price. For prospective buyers, it emphasises the necessity of thorough due diligence to understand every aspect of a property before placing a bid, including its auction history.
National Analysis
Let's delve into the national figures to gain a comprehensive overview of the market. Our analysis is segmented into four key sections, each shedding light on different aspects of the property auction landscape:
- Number of Repeat Entries: Revealing the frequency and impact of properties making multiple appearances at auction.
- Split of Single and Repeat Entries: Examining the distribution between properties making their first auction appearance and those returning to the market.
- Guide Price Influence on Sale Price: Investigating how guide prices influence the final sale prices of properties in the market.
- Timing for Relisting: Analysing the patterns and intervals associated with properties being relisted for auction.
This breakdown aims to provide a nuanced understanding of the national trends, offering valuable insights for stakeholders navigating the dynamic landscape of property auctions.
Navigating Auction Success: A Comparative Analysis of Single and Repeat Entries
The decision for a property to return to auction can stem from various factors, with the primary ones being:
- Reserve Price Adjustment: The auctioneer or seller may not be satisfied with the reserve price (the minimum acceptable price), prompting them to temporarily withdraw the property. It could reappear later with an adjusted reserve price.
- Legal Issues: Unforeseen legal or title complications may emerge during the auction process, leading to a temporary withdrawal. Once these issues are resolved-keep an eye out for that elusive missing document-the property may be relisted. If you want more information about what to look out for in a legal pack, please see our blog
- Lack of Buyer Interest: In cases where there's a dearth of interest or limited bidding activity, sellers might withdraw the property to reassess marketing strategies, pricing, or address any issues that deter potential buyers.
A successful sale hinges on getting the guide price right to attract enough interested bidders to meet the reserve, and a complete legal pack is crucial to ensure a smooth path to completion. Without these elements in place, properties may be withdrawn or fail to sell, resulting in increased re-entries. For a comprehensive exploration of the reasons behind property relistings, check out our blog on the website for more detailed information.
Market Insights: Unveiling the Share of Single & Repeat Sales
The landscape of property auctions has undergone a significant transformation, especially in the share of single and repeat entries. Since 2018, the number of repeat entries have nearly doubled. This shift is emblematic of the broader changes in the property market, spurred by the strategic adaptations following the onset of the Covid pandemic.
2022-2023
The evolution of auctions, particularly the transition to online and livestream formats, have played a pivotal role in this paradigm shift. Unlike the traditional model of auctions every 6-8 weeks, the digital realm allows for more flexibility. When physical auction rooms were closed, the industry swiftly embraced online alternatives. This shift made it easier than ever to withdraw and relist a property, particularly in response to low interest levels or the absence of registered bidders before the auction opens.
With this agility, auctioneers can now proactively protect a property they anticipate might struggle to sell, offering another opportunity without compromising its standing. The increased frequency and ease of withdrawing and relisting highlight the adaptability of the auction process in response to changing market dynamics.
Price Wars: Decoding Decreasing Guide Prices vs. Final Sale Price
The question of guide prices and their impact on eventual sale prices intrigued us. The reassuring finding is that dropping the guide doesn't significantly affect the ultimate sale price.
Over the years, our analysis showed that even with a 25% reduction in the guide, the eventual sale price tends to stabilise at around 100% of the original guide price.
In contrast, single entry sales tend to conclude at 120% of the guide. This discrepancy suggests that, for repeat lots, the original guide prices might have been set around 20% higher than the market reality at the time of sale. This insight underscores the importance of accurately aligning guide prices with the prevailing market conditions, ensuring a more optimal outcome for both sellers and buyers in the auction arena.
If you would like to know more about Guide Prices, please see our handy guide
Timely Transitions: Analysing the Journey from Entry to Sale
The graph illustrates a remarkable shift in the average time between the first and last appearance at auctions, plummeting from nearly 9 weeks in 2018-19 to 5 weeks in 2021-2022. This reduction is attributed to the seamless transition of properties from auctioneer-led sales (hybrid in-room or livestream) to an online eBay-style format in a matter of minutes.
This transformation has significantly improved the auction landscape, eliminating delays for re-entries and fostering increased satisfaction among both vendors and purchasers.
What's particularly intriguing is that, despite this accelerated auction cycle, the number of entries has only experienced a modest increase over 2018-2022. The adoption of online auctions efficiently decreased the average lifespan of a property in the auction cycle without causing a dramatic surge in the overall number of appearances. This reflects the positive impact of the shift to online platforms in streamlining and expediting the auction process.
There is a clear shift beginning to occur. As shown, there has been a large increase in the number of relistings which coincides with the falling sale prices we've seen across the sector, as well as an increase in the timeline too. Whether this is an auctioneer deciding to allow more time for marketing or due to delays in the legal packs, this is yet to be seen.
Regional Analysis
Let's delve into the regional figures for a more localised perspective. Our analysis is segmented into two key sections, each providing insights into specific aspects of the property auction landscape in different regions. This breakdown aims to offer a nuanced understanding of regional trends, providing valuable insights for stakeholders navigating the diverse dynamics of property auctions in various locales.
Click on the map to select the region you are interested in.
London - Single vs Repeat entries
Comparison of the number of properties sold that result from a single entry to auction, and the number of properties where they have been to auction more than once.
London - Guide prices vs Sale price
Analysis of the initial guide price, the reduced guide price, and the final sale price.
Regional Data
Every quarter we will be including regional data from the past five years, including the number of lots sold and the average sale price, and now average yield too. This allows you to track what is happening across the country, to spot trends, and see how changes in the wider market may be affecting auctions.
The data in these charts consist of all auction sales on a quarterly basis, including individual single lot sales.
Data for all unconditional auction sales.
Data for all unconditional auction sales where there is an income.
London
South East Home Counties
South West
Yorkshire & The Humber
North West
North East
West Midlands
East Midlands
East Anglia
Scotland
Wales
North West Home Counties
Northern Ireland
Regional Data Analysis
It is evident that broader economic impacts reverberate across various regions, exemplified by the repercussions of Covid-induced lockdowns on the auction market in 2020. Additionally, the noteworthy surge in properties entering the auction sphere in 2023 further underscores the dynamic nature of the market. While analysing the significance of this data, it is imperative to consider the volume of lots being reviewed, especially in less bustling regions where more pronounced fluctuations may occur owing to the comparatively smaller datasets at play.
Closing Summary
In our Q3 Insights, we emphasised the undeniable surge of properties entering the auction arena. However, the linchpin for a triumphant sale undeniably remains tethered to the art of competitive pricing. This review further substantiates our stance, presenting compelling evidence that nearly a third of all properties heading to auction necessitate repeated entries with adjusted guide prices.
The broader market is undergoing rapid transformations, and in the realm of auctions, this evolution is accelerated by the swift cadence of marketing and sales processes. While a property will invariably find its buyer at the right price, the dynamics are shifting towards a buyer's market. It's the buyers who now wield the influence to define the true worth of a property when the gavel makes its decisive descent.
If there are any topics you would like us to focus on in future releases, or you have any feedback or thoughts you would like to share, please contact us on insights@eigroup.co.uk.
David Leary
PS. Our next edition will be released in March 2024, so if you are not already on our newsletter mailing list, sign up today!
Disclaimer: The figures in this newsletter are based on sales data provided to us by the auctioneers.