Property Auction Insights

2023 was a varied year in the property market, and the auctions arena was not exempt from these wider changes. As has been seen in our monthly newsletters, we have been experiencing some of the busiest months for auction sales in history. More sellers are turning to auction, which has led us to see a 16% increase in the number of properties arriving at auction, with the large majority of these being residential stock. The year finished off with a 13.3% increase in the number of properties sold under the hammer.

Despite the increase in sales, the total raised for 2023 only saw a nominal increase of 1.1%, ending at £4,829m compared to £4,779m in 2022. This has meant that we continued to see the fall and subsequent levelling out of average sale prices that began at the tail end of 2022 for the auctions arena. While the overall annual average for 2023 sits at a 10.8% drop on the previous, there were positive signs of recovery during Q4 which have continued into the start of 2024. While the impact of increasing interest and mortgage rates was felt industry wide especially in the second half of last year, the increase in demand has been outwardly noticeable too, and we look forward to reviewing how the auctions market fares during this first quarter.

Focus on: Property Yields into 2023

In our first edition of Property Auction Insights, we delved into the world of tenanted properties and those generating an income for prospective buyers. We wanted to revisit this topic and to see what impact the wider economic changes have had on this particular sector of the market.

Material Information has been a recent hot topic in the property industry, with National Trading Standards providing clear guidance to all property professionals as to what should be included in details when selling or letting a property. Auctions have always been ahead of the game when it comes to transparency for customers, needing to provide the up-front information to allow prospective buyers to carry out their due diligence in advance of placing a bid. This is either presented directly within the marketing materials, or within the provided legal packs ahead of the sale, and all prospective buyers are advised to seek legal advice prior to bidding.

But does this always happen? We reviewed over 18,000 properties that went to auction during 2023 to see the truth behind legal packs and how bidders interact with them.

So, when is the best time to seek legal advice? We assessed the average situation at set points- 28 days prior, 21 days prior, 14 days prior, 7 days prior, 3 days prior, and the day prior to sale. On average, 7 days before the auction seems to be the optimal time to start interrogating the legal pack as at this time 86.7% of lots had documents to download, with on average 11 files available to view out of the 13 files we would generally see before bidding commencing. The day before auction, 99.5% of lots had 13 files available to download. However we would not recommend waiting for any information that may be material in your decision.

There are key documents you would expect to see as part of a legal pack. In particular, the Special Conditions of Sale are one of the must-read files, as this outlines aspects like completion times, additional fees and any other pertinent information you should be aware of prior to bidding. We looked into legal packs where a file was uploaded with a specified file name indicating Special Conditions.

When doing this, it was clear that this particular file was generally one of the last to be uploaded, jumping from 67% of lots having this file available a week prior to auction, to 88% three days before sale. More interestingly, 4.6% of lots had the special conditions uploaded on the day of the auction itself, leaving limited time for due diligence purposes. There are numerous reasons why the legal pack may not be complete until just before the start of the sale and it is prudent to ensure every document is thoroughly examined and any queries satisfied before placing a bid.