By Damon Culbert, TIC Finance
Thanks to the pandemic, property auction houses have not run in-person auctions for over a year. Many switched comfortably to online-only offerings, already benefiting from the technology to do so, but what is the future for property auctions as restrictions begin to ease again?
House auction interest still climbing
Google data suggests that house auction interest on the search engine is currently up 50% from last year, showing that property buyers are turning to this method in even greater numbers than at the height of the pandemic. The appetite for house auctions is certainly present, suggesting that most auction houses will continue to capitalise on this new group of buyers well into the future.
Top hotspots in the UK
Research by TIC Finance into search habits of buyers across the UK revealed a number of property auction hotspots over the last year. Overall, the West Midlands enjoyed the most interest, with over 69,000, or an estimated 241 in every 10,000 people, searching for the term each month.
However, cities in the North West had the most interest when the data is examined closer. Chester (219.85), Manchester (192.08), Preston (186.21) and Liverpool (141.10) were the top 4 auction hotspots, with Derby (113.45) coming 5th for searches per 10,000. Sellers in these areas can enjoy considerable bonuses to their guide price, with some auction houses seeing properties go for over £30,000 more than expected in the last month.
How auction houses plan to return to in-person activity
While online auctions have proven to be a runaway success under lockdown, there will inevitably be a transition back to in-person events. The major desire for a return to the norm is being driven by the fact that a lack of in-person activities means people miss the buzz in the room, something that is impossible to replicate purely online.
Most auction houses plan to implement a hybrid structure in the future, where potential buyers can tune in virtually from anywhere and those in the local area can get involved on the day. This is perfect for buyers and sellers as no buyers are excluded based on geography, allowing for wider scope to buy and more potential people to sell to.
This hybrid model also retains the key positives from online-only auctions, such as the availability of buyers. This would never be replicated in-person, with some auction houses seeing almost 35,000 people tuning in on any one day.
What’s going to happen at the end of the stamp duty holiday?
With much shorter completion times, part of the appeal of property auctions could be driven by the stamp duty holiday. Though a much shorter time than with traditional property purchases, buying a property at auction can still take around 28 days to complete. Stamp duty is expected to see a staggered return to pre-holiday levels from June 30th, so what will happen to the auction houses once the chance of savings has diminished?
Outside of the auction house, the property market is very much a sellers market, with the combined factors of lockdowns, stamp duty and Brexit causing havoc in pricing and interest. The government’s 95% mortgage guarantee scheme will also be ramping up throughout the rest of the year, which could see even more buyers climbing onto the ladder.
Buyers purchasing properties below £250,000 will still also enjoy no stamp duty until the end of September and, with so many auction house properties coming under this limit, stamp duty will still not be an issue for a great number of those getting involved.
Though the stamp duty holiday may have driven the initial house auction interest, with so many new people getting involved in the world of auctions, this interest is unlikely to crash as the stamp duty holiday comes to an end.
How can would-be investors benefit?
Potential buyers can take advantage of a hybrid system to maximise their investments and become auction house experts without the need to set foot in a ballroom auction.
- Use online auctions to get experience
In-person auctions can be nerve-wracking for those who have never experienced them before. Many seasoned auctioneers turn out and bidding can get intimidating for some. If you don’t feel comfortable going under the hammer in person, online auctions allow you to build up experience and confidence before you get too deep in the environment.
- Search further afield for a top bargain
Buyers looking for less competition may want to try cities with lower online interest, our research shows that, per 10,000 residents, cities like Aberdeen (18.14), Worcester (12.56), Exeter (14.03) and Sunderland (15.54) have the least interest in house auctions. Most landlords own properties in the same region they live but savvy investors or house flippers might be able to secure a bigger bargain by widening their search.
- Don’t get carried away
The excitement of an in-person auction can sometimes bring out our competitive nature and can be risky for those with a very strict budget that find themselves over-bidding. If you know you’re prone to competition on the day, removing yourself from the atmosphere of the auction house might help you keep a more level head and help you bow out when the property starts moving out of your intended price range.
The future of house buying
Property auctions have kept the property market going during extended lockdowns and periods of isolation. The prospect of a hybrid future will likely open up this practice to a much broader audience, enabling people to find bargain properties for their own use or for financial investment. As the UK continues to relax its restrictions and measures to support the housing market continue, the future of house auctions looks set to continue smashing records.
