Buoyant market for auctioneers
Consumers are voluntarily surrendering their assets
TOUGH ECONOMIC TIMES are keeping auctioneers busy. With interest rates, inflation, insurance and fuel costs constantly increasing, bank repossessions and individual sequestrations are definitely up, which means more vehicles and homes going under the hammer.
Clive Lazarus, of Park Village Auctions, says consumers are voluntarily surrendering their assets. “The monthly repayments are stretching them beyond what they can afford. And especially so in the super luxury market, with assets such as boats and jet skis. Those aren’t essential to everyday living and the consumer is simply handing back the keys to the bank.”
Lazarus says that before banks repossess an asset, they make a sincere effort to accommodate the debtor through loan extensions, lower monthly repayments or however else the debt can be accommodated. “But at some point when that’s insufficient they do have to take back the asset and hand it over to the auctioneers for sale.”
It’s been reported that repossessions have doubled from a year ago, with one leading bank indicating it repossessed almost 2 000 vehicles in June this year, against just more than 1 000 a year ago, with the total market being about 6 000 repossessions/month.
With an array of motor vehicles now being sold on auction, Lazarus says the buyer profile is definitely changing. “Previously dominated by the trade there’s far greater interest from private buyers, who feel they
get better value from an auction than from a motor dealer. There are some very good deals available on low mileage, up-market late model vehicles and the motor plans on those assets are frequently transferable to the new owner.
“Buyers are now very astute and informed and know the price they should be paying for assets. And that disciplined approach prevails over any possible auction fever. People who couldn’t afford a new car are now able to pick up significant value at an auction, where vehicles are going for 10% to 15% less than trade value.”
Lazarus says vehicle buyers at auctions are offered greater protection than they would receive from a dealer. “The history and pedigree of that vehicle are known – the service book is available and the buyer sees which financial institution the car has come from. The process is extremely transparent. We won’t buy a vehicle from an individual and on-sell it. We deal with the institutions and they attend our auctions to make sure everything is professionally executed and accounted for.”
In the residential property market, activity is heightened due to consumers under pressure and battling to meet monthly mortgage repayments. Lazarus says the commercial and industrial property sector is holding up far better and owners are even seeing very good returns from rental income streams, propped up by a shortage of properties in that sector.
“The commercial and industrial sectors take longer to respond to an economic downturn. Vacant land on our books is taking a bit longer to sell due to associated issues, such as zoning delays and power supply constraints. With regard to assets coming to us from business liquidations that’s climbing slightly but it’s nowhere near the levels we saw in 1995 and 1996.”
Lawrence Wulfsohn, spokesman for Park Village Auctions property division, says buyers picking up commercial and industrial property investments at auctions should see their investments “turning into gold”. “Although buyers are becoming more selective, they’re acutely aware new developments simply won’t be able to go ahead due to the Eskom moratorium on power supply and that the values of existing properties will benefit.
“Eskom denies there’s an official moratorium on new power connections as such and prefers to indicate it won’t give quotes on new connections for the next six months. To us that means the same thing and the end result is that existing properties with already installed services will be in great demand.”
Vehicle buyers at auctions are offered greater protection.
Some good deals available on low mileage up-market late model vehicles. Main Reef