Residential Auction Market Update Q3 2021 - Gary Murphy

Our last market bulletin (Q2) highlighted the resilience of the residential auction market during the first half of this year. This buoyancy has continued throughout the third quarter despite the phasing out of stamp duty concessions, the end of the furlough scheme and general economic uncertainty as the UK, and the rest of the world, endeavour to navigate a path post pandemic.

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2021 is the first year that Allsop has held an August auction. Held online on the fifth of the month, the sale has to date raised over ￡32.4M with 93% of all lots offered now successfully sold. Despite being held at the height of the holiday season, demand was reassuringly strong. On the day of the auction, there were 3,284 bids and more than 650 bidder registrations, with some of the most popular lots attracting more than 150 bids each. Travel restrictions and quarantine requirements due to Covid ensured that fewer buyers were abroad at this time of year. Irrespective of this, our online offering enabled bidders to engage no matter where they were in the world.

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The highest value lot to go on the day was a freehold building with seven self-contained apartments in Elephant & Castle. It sold for ￡1.39M. A former education facility in Swansea with potential for change of use or redevelopment sold for ￡217,000, almost five times the guide price of ￡45,000. A freehold building in Thornton Heath, Surrey with development potential was originally guided at ￡570,000. It was sold for ￡1,307,000, after bids were received from 30 potential buyers. And a three-bedroom semi-detached house in Sevenoaks, Kent which attracted more than 150 bids, sold for ￡378,000, substantially in excess of the guide price of ￡225,000.

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Having taken ￡32.4M from the market in August for the first time, concerns were raised about the potential for building a traditionally mammoth September catalogue. Even if the stock were there to be sold, would there be sufficient buyers to sustain a strong result? Any fears were soon allayed. On 10 September the catalogue was released promoting 236 lots across the UK - 21 with guide prices at or above ￡1M. Buying opportunities included Grade II Listed buildings, owner-occupier “value-add” homes, student investments, roof spaces and development sites. Early interest was shown by both domestic and international buyers. The easing of restrictions and the acceptance of safety measures helped to increase the number of in-person viewings.

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The sale was held online on 30 September and has, at the time of writing, raised over ￡61M from the sale of more than 165 lots. The success rate was 82% and demand was as strong as we could have hoped for. On the day of the auction, there were 5,770 bids and more than 1,166 bidder registrations. 12 lots were purchased for ￡1M or above and the average lot size was ￡360,440. The result was the highest total for a residential UK sale this year and, with the August sale, set a record for residential auction receipts in August/September at ￡91.6M. The highest value lot to go under the hammer was a freehold semi-detached building in Willesden Green, London, in need of renovation, which sold for ￡1.3M. It was originally guided at ￡920,000. An unmodernised two-bedroom maisonette in Islington, London, sold for ￡706,000, well above its guide price of ￡310,000, having drawn 396 bids. A freehold detached four-bedroom house in Epsom, Surrey, sold for ￡702,000 – originally guided at ￡350,000 – with 59 buyers having registered to bid for it. And a partially completed freehold residential development scheme in Camden Street, Liverpool sold at ￡712,000 from a guide price of ￡350,000.

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The total raised in 2021 from residential auction sales is currently ￡281.96M. At this point in 2020, the equivalent total was ￡220.5M - an increase year on year of 28%.

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Our next residential auction will be held online on 9 November. This again promises to be a large sale with a broad choice of opportunities. We remain positive about the market for the remainder of the year and beyond. There is an increasing interest in the UK from overseas investors, particularly for high quality stock in London and the south-east. Values continue to rise in well-connected rural locations as an outdated urban and suburban living-commuting lifestyle gives way to more flexible remote working patterns. Development opportunities will continue to favour buyers as long as the delivery of materials is challenged by impaired supply chains due to lack of drivers and a continuing fuel crisis. Rental demand remains strong across the country thus ensuring a favourable climate for buy to let investors (despite a less favourable income tax environment). And owner occupiers will continue to search the auction catalogues for ways to add value to unmodernised properties.

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For the foreseeable future, residential remains resilient.

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For updates on all the markets Allsop operates in, please download our Q3 Property Market Update 2021