Investment / Vacant
In total, 810 fully vacant properties were sold in 2017. This is an increase of 16% from the 698 transacted in 2016. On the other hand, the number of investment properties offered decreased from 464 in 2016 to 361 last year. Similarly, fewer part vacant lots were sold – 58 went under the hammer in 2017 compared to 62 the previous year.
Commercial / Residential
The proportion of purely residential property by volume of lots sold in 2017 was down slightly from 2016 (80% from 82%). However, the value raised from this sample increased from £279m to £302m.
The proportion of commercial properties offered in 2017 was 9% of the total, up from 7% in 2016. However, the total raised was down from £56.5m to £37m. Many of the more valuable commercial lots offered were vacant office buildings with permitted development rights (PDR) or potential for residential conversion. These opportunities have been very popular since 2015 (when £65m was raised from this sector). Over the last year however, good quality PDR opportunities have been scarcer and buyers have become more discerning. Last year, permitted development rights for conversion to residential use were extended to light industrial buildings. Few such opportunities found their way to auction, however.
The proportion of mixed use lots sold rose slightly last year from 11% in 2016 to 12%, although the total value raised fell from £93.5m to £87m.
Regional Distribution of Properties Sold in 2017
The proportion of properties offered in London and the South East remained broadly similar in 2017 at 59% of the total (2016 – 60%).
In fact, in all other regions, with the exception of Northern Ireland, regional distribution of lots remains roughly consistent with 2016. Whereas only four Northern Irish lots were offered by Allsop under the hammer in 2016, 27 were offered in 2017. This has been due to the increased liquidation of distressed stock by buyers of loan books with particular exposure to the area.
Average Price Achieved for Vacant Single Units (Houses & Flats)
The average price of a single vacant unit at our 2017 sales was £346,000 (2016 £352,000). When broken down regionally, the only areas to show falls are the M25 (Greater London) and Scotland.
The Scottish sample is small and therefore unreliable. However the fall within the M25 from £622,000 in 2016 to £561,000 in 2017 is noteworthy. The trend is consistent with the Nationwide Building Society House Price Index. This shows that, although UK annual house price growth ended 2017 at 2.6% (compared with 4.5% in 2016), London was the weakest performing region with house prices down year on year by 0.5%. Indeed, we identified towards the end of last year that affordability levels across the UK, as measured by the price-to-earnings ratio, were undergoing a fundamental redistribution. In London, prices are on average 14.5 times higher than average earnings – more than ever before. This is in contrast with the larger UK cities. Prices in Manchester have risen by 7.7% and in Birmingham by 7.3%. Here affordability levels are in line with the 15 year average (source – Hometrack).