Auctions trends to watch in 2023
The saying ‘one man’s loss is another man’s gain’ sometimes fits for the property market right now. Changes in the commercial, residential and financial sectors have created a landscape in contrast to recent years – and could play into the hands of property auctioneers.
A different market ensues
During the pandemic, when interest rates were rock-bottom and the stamp duty holiday in full force, there was an almost panicked sense of ‘go go go’. Everything was going up – ‘for sale’ boards, hotly followed by ‘sold boards’ and, subsequently, house prices. The latter rose to the tune of almost 10% between December 2021 and December 2022, according to the Office for National Statistics.
But what goes up must come down. The cost-of-living crisis, coupled with soaring inflation and a revised Bank of England base rate, will impact house prices in 2023. In fact, Lloyds and Halifax forecast house prices to fall 8% this year, while Nationwide and Zoopla call a drop of 5%
Purchasers on pause will frustrate sellers
As well as purchasers pausing their plans while house prices recede, they’re also waiting for mortgage rates to drop from the highs of 6% back in the autumn. With brokers widely reporting further rate reductions in 2023, purchasers are encouraged to hold out to secure the most affordable home loan.
It’s better news for buyers but not so good news for sellers who can’t hang around for the prevailing conditions to change and this is where property auctions can step in. Property auctions are the breeding ground for buyers who operate outside of the normal parameters. Cash buyers, flippers, investors and landlords – those who aren’t always dependent on mortgages and wider market conditions – will welcome catalogues that are filled with more property stock.
So, could 2023 be the year when property auctions become even more mainstream? We think impatient sellers will increasingly seek the best pool of buyers and this may lead them to the auction room.
The need for quick sales increases
In January 2023, House Buyer Bureau, using Property Data statistics, found there were almost 2,000 homes listed for sale across England where the seller specifically stated they were looking to sell quickly.
This was a 12% increase in ‘quick sale stock’, when compared to June 2022. In some regions, including the South West, the East Midlands and the West Midlands, the rise in quick sale stock was as pronounced as almost 60%.
There are a number of reasons why a quick sale may be needed – death and divorce are always close to the top of the list – but in straightened economic times, two more ‘Ds’ can be added – distressed sales and downsizing to a more affordable property.
When time is of the essence and budgets squeezed, the open market is not always the best sales strategy – a process that The Property Buying Company estimates can take up to six months in a ‘cold’ market. Sellers can take comfort that auctions almost always offer the quickest route to a sale, with the ‘in-the-room’ exchange and fast progress to completion, thanks to upfront legal packs.
Sell quickly to beat the drop
While falling house prices are something widely reported for 2023, drops will happen incrementally, rather than immediately. Sellers who want to cash in before too much of their home’s value is eroded – or they start sailing perilously close to negative equity – can choose the auction path to achieve a speedy sale.
Auctions may also start appealing to vendors who have been on the open market for some time with little interest and are coming under pressure from their estate agent to drop the asking price. In a falling market, there’s a real danger of a surveyor down-valuing a property if there has been slow progress between the property listing and the surveyor’s visit. A quick auction sale can stop a downward price spiral.
Commercial rich pickings
This year could see a rise in ‘change of use’ property projects among the property flipping community, with auction houses the crucial facilitator. Sadly, the cost-of-living crisis, combined with a recession and a permanent move to home working for many, is forecast to increase the number of commercial properties that come up for sale at auction.
This potential influx of premises arrives at a time when ‘flipping’ residential properties takes a backseat, due to falling house prices. Investors will increasingly see value in converting commercial premises that have been bought at below market value – especially buildings that lend themselves to becoming a collection of flats for the best return.
The timing is reputed to be excellent – with house prices forecast to start rising again in 2024 – giving those flipping 12 months to get their projects finished. Additionally, the labour and materials markets are predicted to ease in 2023, with major house builders scaling back construction activity in a slower sales landscape.
Plan for a positive outlook
The signs for increased auction activity look positive and now is a good time for auctioneers to pre-empt a rise in valuation and viewing requests. Viewber is a low-cost, flexible way to obtain sight reports and enable accompanied viewings. Every Viewber can meet potential purchasers at a property, collecting keys if necessary, conduct a property inspection or even run an open house event on an auctioneer’s behalf.
We’ve made booking a Viewber even easier with our partnership with the Essential Information Group (EIG). Our software integration allows property auctioneers using EIG’s auction management system to simply click a button and order a Viewber to visit any property in the UK, seven days a week. See more here: ‘Viewber & Essential Information Group launch new partnership’
If you’d like to know more about our services specifically designed for property auctioneers, get in touch.
