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Residential Auction Annual Review 2016
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Property Analysis

Investment / Vacant

The mix of vacant, part vacant and investment lots last year has changed very little from 2015. The total raised from the sale of fully vacant properties (57% of the total) has increased marginally. Revenue from mixed use and fully tenanted stock on the other hand is slightly down.

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Commercial / Residential

Whilst the proportion of purely residential property coming on to the market remained similar (83% in 2015), a slightly larger offering of mixed use stock came to market both by value and volume. 2015 had seen a sharp rise in the value and volume of commercial lots sold, largely attributable to a healthy supply of, and strong demand for, office buildings with permitted development rights (PDR) for conversion to residential flats. This sector began to cool off in the latter half of last year. Opportunities became scarcer and buyers more discerning. PD is still a popular lot class but sensible pricing will be key in 2017.

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Regional Distribution of Properties Sold in 2016

London was the dominant region of our auction catalogues in 2016. 44% of all lots were located within the M25 and 60% within the South East area overall (up from 56% in 2015). This is consistent with a perceived flight to quality in a more cautious climate.

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Average Price Achieved for Vacant Single Units (Houses & Flats)

The improved supply of South East (including M25) stock accompanies a marked increase in the average lot size of single vacant units in the region, up 21% from £349,000 in 2015 to £422,000 in 2016. The only area to see a significant decline has been the North West.

This trend has to be interpreted in the wider context of UK house prices. According to the Nationwide Building Society, house price growth in 2016 was relatively stable ending at 4.5%, the same as the rate recorded in 2015. There were signs that London’s significant period of outperformance was drawing to a close. For the first year since 2008, annual house price growth in the capital was lower than the UK average, with prices increasing by 3.7% over the year, down from 12.2% in 2015. The South of England as a whole continued to see slightly stronger price growth than the North of England, though the differential narrowed.

We conclude that the rises in value and volume in the South East are due to a much improved level of confidence in the auction method as a route to market for higher value residential properties. We see this trend continuing in 2017 as sellers favour the immediately binding nature of the auction process in an increasingly uncertain climate.

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