Rise in properties at auction could mean fall in prices
The first quarter of 2008 has shown a huge rise in the number of distressed sales (repossessions and failed buy-to-lets) sold at property auctions, as well as a sharp decline in sale prices in the new-build sector – two trends which many fear will bring down prices further in the wider housing market.
[UKPRwire, Mon Mar 31 2008] The first quarter of 2008 has shown a huge rise in the number of distressed sales (repossessions and failed buy-to-lets) sold at property auctions, as well as a sharp decline in sale prices in the new-build sector – two trends which many fear will bring down prices further in the wider housing market.
The March newsletter of the Essential Information Group, which provides comprehensive data on all properties sold at auction in the UK, showed that 18,000 residential properties were sold at auction in 2007, accounting for 1.7% of all property sales, in comparison to only 8,000 residential properties auctioned in 1997.
The average proportion of distressed lots to totals offered at auction has risen steeply in all areas of the UK, including London, in the last quarter of 2007 and the first quarter of this year, accounting for an average 22% of total lots nationwide. Increasingly, these are repossessions, which are predicted by the Council of Mortgage Lenders to rise steeply this year to 40,000, from 27,100 last year. Also, a much higher proportion (from 5% in 2005 to 20% now) of auction sales are by lenders who had taken over these properties, and who typically set and accept realistic floor prices.
In the new-build sector, prices for all new-build flats sold at auction between January 2005 and February 2008 fell an average 26% across the UK, with the largest percentage falls seen in London.
Sales in the buy-to-let (BTL) market declined sharply in the second half of 2007, as a result of the wider economic difficulties and consequent credit crunch; but with more of these properties on offer at auction, and with yields starting to pick up, there may be more opportunities in this sector for investors with enough cash to finance their buys and have fewer borrowing needs.
“The increase of properties sold at auction spells more bad news for vendors, as the knock-on effect will be to deflate house prices further,” said Lawrence Smith of Decision Homebuyers. “Rather than struggle with higher mortgages and much fewer borrowing options, many vendors are deciding to sell now and rent instead, rather than risk their asking price sinking even further.”
For press enquiries, please contact Phil Rendall on 020 7099 9026
News provided by Decision Homebuyers, a leading UK property company offering a quick and simple solution for selling your home, no matter what the condition.
Decision Homebuyers carries out daily surveys of the national media to provide up-to-date news and commentary on the UK property market.