Forecasting trends for the residential auction market and the wider economy over the year ahead has never been more difficult. The only thing that is certain is more uncertainty. Expect the unexpected.
At the time of writing, it is possible that the terms of Brexit, if it happens, will not be settled within the next 12 months. But this is an uncertainty that our market has been living with for the past two and a half years. In that period, the auction room has continued to trade. There has been no stagnation, little drop in the volume of transactions and no less enthusiasm to do business. Sellers will need to respect buyer sentiment however, and only realistic pricing will see the hammer fall.
The example for effective auction marketing will be set by those vendors whose decisions to sell are not driven by the need to set aspirational reserves, in particular, sellers who have a duty to achieve best value on auction day but not to wait until certainty returns and values are on the rise again. Those sellers include housing associations, local authorities, public bodies, mortgagees and receivers. These lots will continue to form the foundation of a good catalogue. They will usually be
reasonably priced and therefore much in demand.
Prospects for moderate to large scale development or conversion will be sought after. This area will be particularly active when underpinned by the potential for
implementing schemes that serve the relatively stable markets of Build to Rent, Help to Buy, co-living, affordable housing, student accommodation and Houses in
Multiple Occupation (HMOs).
Interest rates have risen to 0.75% but will hopefully remain low. This continued environment will help to underpin stability. The Bank of England has indicated that, in the event of a hard Brexit, lending restrictions will be relaxed.
There is anecdotal evidence that, once the UK has left the European Union, we may see a ‘Brexit Bounce’ as those who have so far held back from trading re-enter the market in the face of restored stability. This is possible, but confidence will depend on the terms of the deal.
At the time of writing, we are preparing large and exciting catalogue for our 14 February auction. Several lots have been announced early and preliminary indications are that interest will be strong. The auction market is an interesting one. For many, it is driven by the search for value. More turbulent times seem to present more opportunities. Consequently we expect sustained activity. As ever, pricing will be of paramount importance.