Buyer demand remains high in robust market
IN A boom for property, auctions can get left behind. Vendors see private treaty as the way to secure high prices. Not this time. With average UK house prices rising strongly in 2021, increasing by 5.6 per cent in the first six months of the year according to the Nationwide index, auction catalogues are maintaining their strength, too. There were fears among property professionals that the rush of activity prior to the stamp duty deadlines of March and June would mean slower sales in the summer. However, auctioneers continue to see elevated levels of demand against the backdrop of limited supply.
Research by auctioneer Savills says that the ‘imbalance’ looks set to maintain growth for the second half of the year. It expects annual house price growth across the UK as a whole to end 2021 at nine per cent.
It warns, however, that residential transaction levels will diminish gradually over the remainder of this year as government support for both the housing market and the wider economy is withdrawn. The pace at which sales continue to be agreed suggests to Savills that national transaction levels will still end the year at circa 1.62 million. That is roughly 35 per cent higher than the average for the five years prior to the pandemic, despite an acknowledged shortfall of supply to meet demand.
Do not expect the same in 2022, says Savills. The recent strong price growth, combined with an expectation that interest rates start to rise a little earlier than previously anticipated, leaves much less capacity for price growth post-2021. Affordability limits have become embedded by the stress testing of mortgage affordability at a borrower level and the caps on lending at high loan-to-income ratios that were introduced by regulators to ensure responsible lending. Its price growth prediction for the period 2022 to 2025 is 11 to 12 per cent.
Among bigger residential properties to go under the hammer at Savills’ September 1 sale was a nine-bedroom house on Chivalry Road, SW11, with a rear garden. With vacant possession and in need of modernisation, guide price was £1.2 million. Also in the sale was a flat on Cricklewood Broadway, NW2, at guide price £230,000. The vacant two-bedroom second-floor flat is on a long lease.
The biggest property auctioneer in the UK, Allsop, raised £43 million from 166 lots at its June auction as the end of the stamp duty holiday neared. Around 1,000 registered bidders placed 3,748 bids throughout the day and success rate was 90 per cent.
Richard Adamson, partner and auctioneer at Allsop, says: “Our June auction saw a flurry of activity, and we’re pleased to see that buyer demand has remained strong despite the looming end of the stamp duty holiday.
“The successful rollout of the vaccination programme, coupled with the gradual lifting of the Covid restrictions across the country, has helped sustain and amplify confidence in the residential property market, and we expect this trend to continue well into the second half of 2021. We look forward to bringing more opportunities to the market as the UK returns to normality”.
Auction highlights included a freehold detached former office building in Haywards Heath, West Sussex, with prior approval for change of use to provide 76 apartments; this was the biggest lot of the auction, selling prior for well above the £7 million guide price. A freehold semi-detached period building in Wandsworth Common, London, comprised of two self-contained maisonettes, was the largest lot to sell on the day of the auction, achieving £1.5 million.
Strettons, which has sold more than £100 million of property in the past 12 months, raised £12 million in its July sale, with a 90 per cent success rate.
The highest price of the day was achieved for a freehold detached bungalow with development potential in Uxbridge, Middlesex, sold for £650,000, slightly above its guide price. This was followed by a freehold residential investment of two flats in Walthamstow, selling for £542,000 against a guide of £425,000.
Other notable sales included a freehold vacant semi-detached house in Chingford, which reached £316,000 — more than double its £150,000-plus guide. In Rainham, Essex, a freehold commercial investment and vacant two-bedroom flat sold for £407,000 (guide, £280,000).
As with previous Strettons sales, a series of land investments sold on behalf of advertising agency JC Decaux were also popular. All sites sold, with prices from £40,000 for a site in Swindon, to £142,000 for a site in Southampton, significantly above its £85,000 guide.
Strettons’ auction director Andrew Brown says: “There was good, strong bidding for the vast majority of properties on the day which I think demonstrates a robust market with plenty of buyer interest. I am very pleased with the results and I am looking forward to our September sale.”
Barnett Ross held a remarkable auction in July. One lot only — so it can claim a 100 per cent success rate. It
The vaccine rollout helped sustain and amplify confidence’
sold Gisburn Mansions in Hornsey, N8 for £12.35 million. Its May auction of 17 lots achieved a 100 per cent success rate, raising £4.583 million. Top lot of the day was a block in St Albans that sold for £810,000.
Auction House London’s July sale achieved an 87 per cent success rate and raised £27.5 million. At its June sale, Auction House London had topped that with total sales of almost £29.8 million and another 87 per cent success rate. A rectangular piece of land in Sunbury on Thames, Middlesex, with planning in place for a two-bedroom detached house, was guided at £50,000, before finally selling for almost four times that at £198,000.
Land without planning proved equally attractive to bidders. In Wynches Farm Drive, St Albans, a parcel measuring almost 0.2 acres with potential for development was guided at £80,000 and sold for more than double that at £205,000.
Auctioneer Andrew Binstock says: “More than a year after the first lockdown and the market remains extremely buoyant, with no sign of lessening off. This is partly due to the break from stamp duty, but also the fact that land and property outside of London remains in high demand.
“Inevitably, the current enthusiasm from buyers will lessen off eventually, but at the moment it’s a sellers’ market and a good time to auction property. Online selling will always continue in some form and we’re unlikely to be back in a real auction room before September — and even when we are, we’ll be accepting internet bids as well as those from the room.”
It’s a sellers’ market and a good time to auction property’
Clive Emson achieved 80 per cent sold in its July auction, mainly property across the South of England. In June, it sold a three-bedroom freehold residential investment in Haringay, N15, for £565,000 — a Victorian house close to Turnpike Lane.
Pugh Auctions has a sale coming up on September 22, with lots so far mainly in the North of England. Pugh’s July catalogue listed 80 properties of which around half sold on the day, post or prior.
McHugh & Co’s July auction included houses, flats, garages and ground rents. A buyer picked up a three-bedroom freehold semi-detached house with a garden and vacant possession in Mill Hill East, NW7, for £570,000. Another paid £506,000 for a threebedroom semi-detached house with front and rear gardens and vacant possession in Mimms Hall Road, Potters Bar. And a third picked up a vacant cottage in Bognor Regis for £43,000.
The garages did not sell so well. All in the M25 area, those that sold went for prices from £10,000 to £72,000. Half of the eight freehold ground rent investments at the end of the sale sold
for prices from £3,500 to £37,000.
All these auction houses are traditional ‘ballroom’ auctioneers, and most, prior to 2020, said you could not achieve the same level of bidding online as you can when you can see bidders face-to-face. All moved to online auctions during the pandemic.
There are auctioneers who moved online before 2020. BidX1.com’s association with residential private treaty agent Foxtons has pepped up its offer.
In its September 1 auction, lots included a three-bedroom flat on Iverson Road, West Hampstead, NW6, with an invited opening bid of £795,000.
Invited opening bid for a one-bedroom unit on Cricklewood Lane, NW2 was £280,000. Next auction is on September 15.
Meanwhile, Lambert Smith Hampton’s auction website 574 has two lots for sale on September 8 — a detached former farmhouse outside Carlisle, guided at £70,000 and 0.29 acres of land near Preston, guided at £45,000.
The commercial market has had its woes, as property investors recalibrate their portfolios as they see retail demand slump and expect a slowdown in office demand. However, that has led to spectacular auction catalogues.
At its July sale, Allsop Commercial raised £67 million from 80 lots, with an 84 per cent success rate. “We’ve had a busy time and the market has responded incredibly well,” says George Walker, who was auctioneer at the sale.
More than a third of lots at Allsop’s sale sold for more than £1 million, with average £1.6 million. Some £55 millionworth of the total were retail lots.
Biggest lot was a hybrid auction/ private treaty lot that sold prior to the auction. On Hanover Street in the heart of Edinburgh and let to TSB, interested parties included a boutique hotel operator. It went to an undisclosed bidder, not the hotel operator, for an undisclosed price.
A 15,000 sq ft unit in Hounslow, let to TSB until 2029, sold for £3.5 million, a yield of 4.35 per cent on income. According to Allsop, what attracted bidders was its quarter-acre site and its redevelopment potential post 2029. It sold to an overseas buyer. “These things are being noticed,” says Allsop’s Will Clough.
Acuitus’s July auction illustrated that investor appetite for commercial property has been sustained, despite gloomy prognoses for both the high street and the offices in city central business districts. The auctioneer’s sale saw 91 per cent of the lots offered sell for a total of £12.76 million. This brought the total realised at Acuitus auctions in the first half of the year to £93 million — a 60 per cent increase on the corresponding period in 2020.
Acuitus auctioneer Richard Auterac says: “The first half of this year has seen the tech platform on which our auctions are now conducted come of age. The ease of access and convenience of our live-streamed auctions has been enthusiastically adopted by those who wish to invest in commercial property.
“As we head into the second half of the year, demand from private investors should remain on a continued upward curve as an increased universe of buyers target both secure income and asset management potential.
”The readjustment in the pricing of high street retail assets located outside London and the major cities continues with demand remaining firm for the best locations.”
At Acuitus’s July sale, a freehold retail investment in Farnham sold for £910,000 at a net initial yield of 6.76 per cent. The 4,129 sq ft shop was let last September to accessories, homeware and gifts retailer, White Stuff on a new five-year lease at an annual rent of £65,000.
A freehold retail investment in London’s Kingston-upon-Thames, let to
Pret a Manger until 2028 at a current rent of £181,500, sold prior for substantially more than the guide price of £1.9 million.
There has been concerted buying of Greater London investments throughout 2021. A mixed-use investment/ development opportunity in Stamford Hill, offering current income £108,320, sold prior at comfortably over its guide price of £1.7 milion.
Auterac adds: “Whether it is properties which provide management potential through residential on the upper floors or those that offer the security of income, the auction room continues to be the most effective means of matching investors with the assets which suit their investment strategies”.
We’ve had a busy time. The market has responded incredibly well