The Allsop Buyers Survey, asked at the point of exchange since 2012, picks up on trends and sentiment amongst buyers which helps us look forward.
The survey reveals a similar overall trend as seen in last year’s summer review, but with some differences. The majority of buyers in the auction room are experienced, are relying on cash reserves to complete and are looking to buy again at auction in the near future. This year we have seen an increase in local/ domestic buyers looking for opportunities to purchase close to their homes. Demand for £1m+ lot sizes has increased on last years, perhaps reflective of the recent supply.
Have you bought a property at auction before?
The majority of buyers in the room have bought at auction before (82%). This continues a trend seen over the past few years with marginally more first time auction buyers coming to the room in 2018 than in previous years (18% in 2018, 14% in 2017). This increasing number of first time buyers is probably attributable to the lack of correctly priced stock on the market elsewhere. The auction room presents a straight forward and secure method to purchase a property compared to often long and complicated private treaty transactions. (Graph A)
How far are you located from the property you have purchased?
This year we have seen a rise in the number of local buyers over recent past years (45% in 2018, 36% in 2017). This increase is likely to be a result of heightened caution by some investors who previously might have ventured further afield in their purchases and now deciding to purchase in areas close to their home, in areas they know well. The number of investors looking outside of their home region for assets remains high at 56% albeit down on recent years (63% in 2017, 58% in 2016). (Graph B)
How do you intend to fund the purchase?
Although cash remains prevalent amongst buyers to fund purchases in the room (73%), the number of buyers seeking finance between exchange and completion has increased on the previous year. This corresponds with the findings of our own valuation team who have seen a marked improvement in the availability of funds from lenders, both for new purchases and refinancing. (Graph C)
Do you intend to buy another commercial property at auction in the next 12 months?
The answer to this question continues to give encouragement that the market will remain strong and why we feel changes in the market are price driven rather than investors moving their money out of real estate. 89% of buyers state their intention to buy another commercial property at auction in the next 12 months. This represents a continual increase on recent years (80% in 2017 and 78% in 2016). Looking ahead over the next 5 years. 98% of buyers intend to buy another commercial property at auction (96% in 2017 and 93% in 2016). This high figure highlights that commercial property presents and remains an attractive investment opportunity to many investors and they will look to the auction room to make their purchases. (Graph D)
How much do you intend to invest in any single property?
Demand from investors for larger lot sizes has continued to grow with 37% of buyers looking to invest £1m+ in any single property (27% in 2017, 27% in 2016 and 30% in 2015). This is perhaps reflective of the volume of larger lots being offered in the auction room. Mid-sized demand also remains strong with 57% of investors seeking to purchase lot sizes between £250,000 – £1,000,000 (64% in 2017 and 63% in 2016). It is likely that demand remains strong for these mid-sized lots as investors exit residential “buy to let” holdings and move into commercial property amongst other investments. (Graph E)
Allsop £1m+ Lots