Fewer buyers and more sellers are taking part in property auctions, suggesting it’s becoming more of a buyers’ market.
Property purchasing specialist, House Buyer Bureau, calculated auction demand based on the ratio of auctioned stock listed online that has already been sold subject to contract.
Demand stood at 29.7% this year, falling by -5.7% from 35.3% in 2022 across Great Britain. At the same time the proportion of stock being listed for sale at auction rose from 1.6% in 2022 to 2.3% in 2023 – so supply is up and demand is down.
Chris Hodgkinson, managing director of House Buyer Bureau, said: “What we’re currently seeing with respect to auction property sales is far fewer interested parties than previously. This naturally means fewer bidders, with properties achieving less when the hammer does fall compared to this time last year.
The profile of the auction buyer has also changed due to heightened levels of market uncertainty and increasing mortgage rates, with a reduction in the number of less experienced, mortgage backed bidders.
While the more experienced cash buyers have remained, what these figures don’t highlight is the higher level of homes that fail to even make the auction room due to a lack of interest.
The current challenge facing sellers is that should their property fail to sell, this could further deter potential buyers, or at best, cause them to come in with an even lower offer. With the current outlook unlikely to change anytime soon, we expect the auction market will remain fairly subdued over the mid-term, at the very least.”
Where demand is lacking
In London just 15.1% of auctioned properties are sold under contract, outlining that there’s an absence of buyers willing to pay the high prices expected in the capital.
There’s also low levels of demand in Scotland, at 23.9%, and the North West, at 25.7%.
Buyer interest fell annually in every region of Great Britain, but the biggest reductions took place in Scotland, at -13.1%; the North West, at -12.1%; and the West Midlands, at -10.9%
It’s possible that the current environment of higher mortgage rates is causing some hesitation amongst buyers, who are less likely to take the risk of buying at auction when they’re financially squeezed.
In-demand regions
While there’s evidence that we’re shifting to more of a buyers’ market, there’s a lot of competition amongst purchasers in the East of England in particular.
Demand sits at 38.3% in the region, well above the average of 29.7%. A lack of choice means buyers are snapping up properties quickly, as auctioned stock only makes up 1.9% of the market in the East of England.
The second and third most popular regions for auctions are the South West, with demand of 36.7%; and the South East, at 34.2%.
Where stock is commonly auctioned
There’s plenty of stock in the North East, where it accounts for 5.6% of the housing market in the region. A greater proportion was listed than last year, as 4.7% of properties were auctioned in 2022, so there’s been a strong uplift of stock.
This matches up with solid demand of 30.3%, suggesting there’s a stronger culture of auctioned sales in the North East compared to other regions.
The North West also has a solid ratio of auctioned stock, at 2.9%, followed by the East Midlands and Wales, where it accounts for 2.8% of the general market.
