HEART­LAND UK CLAS­SICS PRICE SURGE

Auc­tion house says af­ford­able clas­sics are soar­ing in value – helped by con­tin­u­ing low in­ter­est rates

Classic Car Weekly (UK) - - Front Page - Mur­ray Scullion

The val­ues of sub-£100,000 clas­sic cars con­tinue to buck mar­ket ex­pec­ta­tions by forg­ing up­wards. The big ris­ers, says Sil­ver­stone Auc­tions, are in the main­stream and mod­ern sec­tors, as buy­ers turn to them as a way of mak­ing up for low re­turns on tra­di­tional in­vest­ments. This comes in the week when a Peu­geot 205 GTI is auc­tioned for £30,000.

Not ev­ery­one wants to see se­ri­ous in­vestors con­tin­u­ing to show too much in­ter­est in clas­sics.

CCW’s mar­kets ed­i­tor Richard Bar­nett says: ‘The view from my desk is that in­vestors might look to put their money some­where else – prop­erty, art, jew­ellery, as I have an inkling they see the old car mar­ket as passé. And if they do, good!’

‘The sub-£100k bracket con­tin­ues to per­form well, with mod­ern clas­sics see­ing the largest area of growth’ WILL SMITH, SIL­VER­STONE AUC­TIONS

The worka­day clas­sic car mar­ket is go­ing from strength to strength de­spite on­go­ing wor­ries about the UK econ­omy. And the lat­est drop in in­ter­est rates is set to con­tinue ben­e­fit­ting the clas­sic mar­ket.

The cut in the UK base rate from 0.5% to 0.25% by the Bank of Eng­land last week con­tin­ues a pe­riod of record lows. The first move to su­per­low in­ter­est rates came as a con­se­quence of the global bank­ing cri­sis in 2008 – and this was par­tially re­spon­si­ble for the boom in clas­sic car in­vest­ments then. The base rate could drop again if the UK’s prospects don’t im­prove in the com­ing months – fol­low­ing Bri­tain’s vote to leave the EU.

Bank of Eng­land gov­er­nor, Mark Car­ney, has ass­sured bor­row­ers that lower in­ter­est rates must be passed down by com­mer­cial banks. This will hit re­turns from sav­ings, mak­ing clas­sic cars an in­creas­ingly at­trac­tive buy. Af­ter an­nounc­ing the cut, Car­ney said lenders had ‘no ex­cuse’ not to pass the rates on. He warned that ‘re­turns are very low and they’re likely to be low for some time’.

Ex­perts in the clas­sic mar­ket are claim­ing that these low re­turns will boost clas­sic car sales as peo­ple look to put their money else­where – with the great­est growth an­tic­i­pated in cars worth less than £100,000. The mod­ern clas­sics mar­ket is show­ing im­pres­sive growth, with val­ues of the most de­sir­able cars from the 1970s-1990s dou­bling – and more – be­tween 2010 and 2016. Even since 2014, growth has been im­pres­sive (see chart), and there’s lit­tle sign of this slow­ing.

‘The mod­ern clas­sics mar­ket is storm­ing ahead right now,’ says CCW and Mod­ern Clas­sics ed­i­tor Keith Adams. ‘Auc­tion houses and deal­ers are switch­ing on to the ap­peal of mod­ern clas­sics, tap­ping a rich seam of de­mand which has been build­ing over the past 10 years or so. With more sales now fo­cus­ing purely on mod­ern clas­sics, buy­ers have a real fo­cal point.’

Sil­ver­stone Auc­tions’ lat­est sale shows signs of this. It made a to­tal sell-through of £4.9m on 28-31 July – a strong per­for­mance af­ter a slew of slow sales im­me­di­ately post-Brexit. The thirst for mod­ern clas­sics was backed up by a Peu­geot 205 GTI achiev­ing a new record auc­tion price of £30,938, more than £12k above its lower es­ti­mate.

Sil­ver­stone Auc­tions sales man­ager Will Smith says: ‘ With poor re­turns in tra­di­tional in­vestor mar­kets, tan­gi­ble as­sets and clas­sic cars should per­form well, as we saw dur­ing the sub-prime cri­sis in 2008/2009. The mar­ket has seen a sen­si­ble self-cor­rec­tion at the top end dur­ing the last 18 months and this should sat­isfy in­vestors that cars are a safe place to in­vest. The sub£100,000 bracket con­tin­ues to per­form well with mod­ern clas­sics see­ing the largest area of growth.’

Not ev­ery­one wants to see se­ri­ous in­vestors show­ing too much in­ter­est in clas­sics. CCW mar­kets ed­i­tor Richard Bar­nett says: ‘The view from my desk is that in­vestors might look to put their money some­where else – prop­erty, art, jew­ellery, as I have an inkling they see the old car mar­ket as passé. And if they do, good!’

Auc­tion ex­pert Richard Hud­son Evans warns own­ers that this isn’t the only rate-cut draw­back. ‘One im­me­di­ate knock-on ef­fect is the fall in value of the pound. With it go­ing down, the value of your clas­sic cars be­come less. An­other prob­lem will be­come the price of parts. As the pound weak­ens, buy­ing im­ported parts and ser­vices from the USA, Ja­pan, and Europe will be­come more ex­pen­sive.’

Keith Adams adds: ‘A fi­nal po­ten­tial spoiler for the growth of clas­sic car val­ues could be the im­po­si­tion of Cap­i­tal Gains Tax on cars. You’d ex­pect a new gov­ern­ment to be look­ing at this po­ten­tially valu­able area.’

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