Residential Auction Annual Review 2018
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Property Analysis

Investment / Vacant

In total, 736 fully vacant properties were sold in 2018. This is a 9% fall from the 810 vacant lots sold in 2017.

Conversely, the number of part vacant properties sold has risen from 58 in 2017 to 90 in 2018, a 15.5% increase. The number of pure investments sold in 2018 increased
from 361 to 384, up 6.4%.

Commercial / Residential

In 2018, the proportion of commercial properties sold was 4.5% of the
total. This is down from 9% in 2017. The total raised from this sector was also
down to £15.2m in 2018 from a high of £56.5m in 2016 and £37m in 2017.

We attribute this to fewer permitted development rights (PDR) opportunities coming to the auction market, despite a continuing, if more selective, appetite. That said, a record was set in February for the largest PDR opportunity to be sold under the
hammer. A pair of adjacent office buildings was purchased under the hammer (in two lots) by the same bidder for £12.4m.

In 2016, permitted development rights for conversion to residential use were extended to light industrial buildings. This potential source of stock failed to
reach the auction room. This was no doubt due to the unsuitable and unattractive surroundings for potential living space within which many such opportunities will have been located.

The value and volume of purely residential and mixed use buildings has remained moderately unchanged.

Regional distribution of properties sold in 2018

The greatest proportion of lots offered in 2018 was within the M25. At 38.7% of the total, this is a fall from the 43% sold in this region during 2017.

The South East saw a greater weighting last year, rising from 16% of the total offering in 2017 to 20.2%. This is consistent with our forecast last year. We
suggested a steady growth in the suburbs and Home Counties as buyers look for more space for their money. Elsewhere, although there has been some minor redistribution of sales regionally, sales in Northern Ireland have dropped significantly from 2% to 0.2%.

Average price achieved for vacant single units (houses and flats)

The average price achieved for a single vacant residential unit at our 2018 sales was £340,000 (2017 £346,000).
Across all ten regions into which we have broken down our UK results, only two regions have shown an increase, the North East and the M25. Both rises were however, small.

This trend paints a slightly bleaker picture than the Nationwide House Price Index. According to the UK’s largest building society, last year annual house
price growth slowed to 0.5%, its weakest pace since February 2013. Across the country, average prices fell 0.7% in the month of December (after seasonal adjustments). Consistent with our own auction results, Outer Metropolitan and London regions both recorded small declines in 2018.

Auction results are more immediately achieved within a period of say four to five weeks, whereas house sales by private treaty in the UK now take on average 3.5 months. Our auction results will be relatively contemporaneous with the market,
whereas the Nationwide data will necessarily lag behind. This suggests that further falls are likely to be recorded across the housing market generally, at
least during the early part of 2019.

This may be welcome news to many struggling to make it onto the housing ladder, particularly in light of the trajectory of affordability levels. The latest
data (April 2018) from the Office of National Statistics (ONS) shows that affordability is still declining. The national price-to-earnings ratio then stood at 7.77, the highest ever in the official time series.