 |
residential auction property investment data | |
RESIDENTIAL AUCTION SALES RISE IN FIRST HALF OF 2008 The fourth issue of RAPID (Residential Auction Property Investment Data) has been published by Allsop, the UK’s leading residential auctioneer and the Essential Information Group (EIG) the leading provider of auction data. The key findings of the report include: A rise in residential auction lots offered in first half of 2008: As the current market continues to weaken, residential auction sales across the UK have risen in the first half of 2008. The rise in lots can be attributed mainly to the growing number of repossessed homes reaching the auction rooms. This recent increase is also evidence of the fact that auctions offer more certainty of a successful outcome particularly in the current market. Sellers, who a year or so ago were managing to achieve quick and relatively easy sales through traditional routes, are now facing a depletion in the number of serious purchasers and also experiencing delays in concluding a successful transaction. All auction houses report a rise in the number of repossessions offered in 2008: Although there has been a rise in the number of repossessions offered, success rates for the first half of 2008 have fallen to an average of 59% (however Allsop have managed to achieve an 82% success rate). From a low of 245 in Q1 05, this has now reached 1,513 in Q2 08. 21% of all residential lots were distressed with the main London auction houses offering the lion’s share (between 50-60% of Allsop’s recent catalogues comprised distressed lots). The North West of England is experiencing the highest numbers of repossessions per head of population offered at auction (12.5 per 100,000). Average lot sizes have dropped across all areas of the UK, with the biggest falls being recorded in the South West (-24.8%) and Yorkshire & Humberside (-23.6%). AST yields in all areas, apart from the South West have risen. Gary Murphy Partner and Auctioneer at Allsop comments “the last 12 months have seen a dramatic change in the residential auction market. Average lot sizes have dropped across all areas; the biggest falls being recorded in the South West (-24.8%) and Yorkshire and Humberside (-23.6%). London lot sizes have dropped by -8.7%. Voluntary sellers of higher value lots, not surprisingly very active in the year to Q2 07, have largely withdrawn from auction, deterred by the crystallisation of potential losses. Buyers of higher value lots, with equity and access to finance, are limited. Significant discount is expected on reserve and there is a general reluctance to commit to deals in the face of further potential depreciation. On the other hand, the volume of lower value stock offered is swelling as repossessions increase. “Investors will be encouraged by the buying opportunities that these shifts present. Yields in all areas, with the exception of the South West, have risen. Highest returns from ASTs at auction are currently to be found in Wales (8.7%) and the North East (9.2%). According to ARIM (Allsop Residential Investment Management), which manages over 10,000 units across the UK for private landlords, demand for rented property is strong as the alternative of owner occupation remains difficult or unattractive. Newcomers to renting, such as former owners (increasingly families), are supporting this trend. Rental levels are improving with growth more pronounced for houses than flats. In the year to December 2007, the ARIM portfolio saw rental growth of +7.25% on reviews. The year to June 2008 saw +7.75% growth with the highest rent increases seen in East Anglia and Greater London. “Looking forward, the market will become increasingly fragile before any improvements are seen. Recovery will rest upon renewed consumer confidence which is currently very weak. We anticipate further falls in capital values of between 5% and 10% in the second half of 2008. However, there is a sustained demand for realistically priced stock in the sale rooms and, in order to restore success rates, auctioneers will need to be robust when selecting the right stock for the right clients at the right prices.” David Sandeman at EIG comments: “as the residential market has softened there has been an increasing demand for statistics and analysis. RAPID is the only publication that looks exclusively at the UK residential property auction market, and due to heightened public interest a website has been launched to coincide with the publication of the fourth issue”. The next issue of RAPID will be released in March 2009. For further information please contact: David Sandeman, Essential Information Group |
 |
 |