The auction market had a robust but challenging third quarter, according to members of NAVA Propertymark's Advisory Panel Board. Panel members reported strong demand for particular lot types and buyers who are more price-sensitive than before.
Investment stock gains ground
One board member has seen the commercial investment market strengthen as some landlords and property investment companies move away from residential ventures because of the Renters' Rights Act and the proposed Commonhold and Leasehold Reform Bill.
"Vacant houses and flats in need of modernisation remain the most popular kind of lot at many auctions, and we're seeing some very strong results in town and village locations across the UK, with City of London-based leasehold flats are struggling for traction due to the saturated nature of this asset class," said Stuart Collar-Brown, president of NAVA Propertymark.
"Speculative parcels of land and garages tend to perform well because this particular asset class is worth different amounts based on the intended use of such land in the long term, so where there are competing views on potential use and value, this can result in competitive bidding," he added.
Lower-priced lots remain favourites in Wales
Affordability is the main factor influencing the auction market in Wales right now, according to a past president of the body.
"Investment properties still have strong demand at auction, and this, coupled with areas such as Gwynedd specifically, which have seen stable rental growth and a strong tourism sector, is delivering positive signs for landlords," said Melfyn Williams, past president of NAVA Propertymark.
"Bangor University also helps to drive rental demand in Gwynedd, with a vibrant student population."
"Naturally, by their nature, lower-priced properties remain the favourite, along with properties in need of modernisation or cottages with land," he explained. "Small parcels of land also always attract interest."
"Supply in the Welsh market is currently high, but with fewer transactions. However, people may be waiting to see what happens with mortgage rates, inflation, the Autumn Budget and the direction of travel regarding house prices before committing to a move."
"In turn, attractively priced auction lots are turning heads and viewing levels remain consistent with the previous year," Williams added. "However, the market does feel more price-sensitive currently."
"Sellers are having to be particularly careful when setting reserves to ensure the right result is achieved. There is likely to be pent-up demand, especially among first-time buyers keen to get a foot on the housing ladder as rents continue to increase."
Pricing strategy takes priority
Another panel member described the auction market as dynamic but more price-sensitive than it has been.
"For me, the key message to sellers is that auction remains a strong and effective route to market, particularly where speed, certainty and transparency are important," said Matt Burrows, advisory panel board member at NAVA Propertymark.
"However, it is not a way of avoiding the realities of the market. The best results are still being achieved where sellers engage with the evidence, set a realistic reserve and allow the guide price to do its job in attracting interest."
"In Warwickshire and Leicestershire, we are still seeing appetite for auction property, especially where there is a clear reason for the auction route, such as refurbishment opportunities, vacant property, investment stock, development potential or more unusual assets. The challenge comes where sellers are anchored to historic values or private treaty expectations that are not supported by current buyer behaviour."
"Overall, I would describe the market as resilient rather than easy. There is still healthy demand, but buyers are disciplined, and pricing strategy is increasingly important."
