Auctions raised 7.5% more over the past 12 months than the preceding period, but caution is being felt in the market.
The total raised at auction from November 2015 to October 2016 was £4.6bn, up from £4.2bn in the preceding 12 months, according to Essential Information Group.
Figures for October alone appear disappointing, with £444m raised at 150 residential and commercial auctions, down by 14% on the £518m raised from 162 sales in October 2015.
However, this is largely explained by the change in timing of Allsop’s residential sale from 29 October in 2015 to 3 November this year. This year’s sale raised £65m, which would reduce the fall from 14% to 2% and reverse the decline in lots offered and sold in October (down by 4% and 3% respectively) into a small rise for both.
Nevertheless, EIG managing director David Sandeman said the market is “tougher now, and stamp duty is horrendous”.
Taking EIG’s residential figures on their own, the Allsop sale would have boosted the total raised in October from £233m to almost £294m (October 2015: £295m).
Changes to the tax status of residential mortgage payments due to be introduced next year may also be cooling the market, Sandeman added.
He said that commercial properties are currently more attractive to buyers. “The yields are better and maintenance is down to the tenant. The downside is that if the tenant goes bust then the owner is responsible for the rates,” he said.
The commercial total raised in October fell by 5.5% to £210m.
Commercial view
Commercial properties are becoming more enticing to investors, according to George Walker, partner and auctioneer at Allsop.
“Allsop’s £117m October auction was pivotal in moving the market on, beyond Brexit,” he said. “Buyers responded to the opportunities that commercial investments can offer in terms of yield and income security, at a time when the options for cash returns are minimal.”
Allsop’s final commercial auction of the year, on 5 and 6 December at The Berkeley, SW1, will see 237 lots offered, including a Pizza Express restaurant in Soho guided at £2.4m-£2.5m, and a 0.89-acre site near Heathrow.
Residential view
The second half of the year has seen a more cautious market develop, according to Savills’ head of auctions Chris Coleman Smith.
“It is good in a way because the market had been galloping along, and now there is a levelling off. But we are still getting a lot of calls from people who want to buy,” he said. “It has become a bit more patchy in London, but regionally the stock has gone.”
Changes to stamp duty were definitely making a difference, Coleman Smith said, with fewer £1m properties sold this year than last year.
Savills’ final London and national auction of the year will be held on 12 December at the Marriott Hotel, W1.
