The regional auctions market went from strength to strength in 2016 and this trend appears to be continuing in the first quarter of 2017.
On a macro level, we believe an increased wave of optimism is filtering through to the auctions marketplace from regional initiatives such as the Northern Powerhouse and the Midlands Engine. When announced, these were summarily dismissed by most business owners, as the rebadging of already announced initiatives into regionally “attractive” packages.
But the recent announcement of the £400m Northern Powerhouse Investment Fund and the launch of the Midlands Engine Strategy has put real flesh on the bones of a devolved regional economic strategy.
In each of their areas, these initiatives are boosting confidence and that confidence is a big factor in the operation of a successful auction network. As a regional auctioneer with a national client base, SDL Auctions reaped the benefits of this buoyant market in 2016 by offering more than 1,600 lots, raising over £150m in sales for vendors and securing an average 80% success rate, plus we launched our online auctions service and have added a seventh Birmingham auction to our annual calendar.
We see an opportunity to replicate this Midlands success in the North West auction marketplace, a region which has strengthened in recent years.
It experienced notable increases in demand for rental properties, particularly in Manchester where rental price growth reached 6.67% in the last quarter of 2016 and rental yields sit at a healthy 6.15% according to LendInvest’s latest Buy-to-Let Index Quarterly Report. This has fuelled our move into the region, launching with auctions in Bolton and Chester next month.
On the micro level, we are still seeing an influx of landlords and first-time buyers as the benefits of the auction process enjoy a higher profile.
The harbingers of doom over Brexit have been confronted every day with another set of positive figures, whether it be the highest employment rates since records began, better than expected GDP or funding for investment available at close to record low borrowing costs.
That positivity continues well into 2017 with few legislative changes on the horizon, no ground-breaking property industry changes in the latest budget and last year’s stamp duty upsets a mere distant memory.
Private rental yields are on the increase with private landlords increasingly looking to the auction room to buy lots requiring refurbishment in the knowledge they can carry out renovations and secure a positive return, through either sale or rental.
There is clearly much to be done to continue the growth of regional auctions as a powerful property medium, but the signs are encouraging. In fact so far this year we’ve already held seven auctions and raised over £29m in sales and we have more than 25 future auctions this year.
Sometimes in business you know via gut feeling when something is going well – and later the data comes along to prove you were right. We have seen this come to fruition in the Midlands and look forward to seeing this replicated in the North West.
The top postcodes for rental price growth Q4 2016
| Postcode | Yield | Capital gains | Rental price growth | Transaction volume growth |
|---|---|---|---|---|
| Stevenage | 4.06% | 9.39% | 10.20% | -11.00% |
| Coventry | 5.10% | 7.35% | 9.49% | -6.98% |
| Romford | 5.24% | 16.55% | 8.33% | -7.84% |
| Northampton | 4.77% | 8.11% | 8.33% | 0.85% |
| Luton | 4.73% | 15.19% | 7.94% | -6.06% |
| Canterbury | 4.44% | 9.74% | 7.45% | -6.39% |
| Rochester | 4.71% | 13.96% | 6.945% | -7.09% |
| Milton Keynes | 4.43% | 9.51% | 6.70% | -7.18% |
| Manchester | 6.15% | 6.60% | 6.67% | -5.98% |
| York | 4.72% | 4.38% | 6.67% | -7.59% |
Source: LendInvest
Regional players
Sutton Kersh was the most active residential auctioneer in the North West last year, raising £46m, according to EIG.
SDL Auctions ranked top in the West Midlands and East Midlands, with SDL Bigwood selling £74m of stock in the West Midlands and DL Graham Penny selling £40m in the East Midlands.
Flat market overall
As of January 2017, the average house price in the North West was £149,767, down 0.39% on the previous month but up 4.6% compared to the previous year, according to the UK House Price Index, writes Julia Cahill.
The region lags behind the West Midlands, where the average price stood just shy of £180,000, up 0.4% monthly and almost 6% annually.
The average house price for the UK as a whole was £218,255 in January, up by 0.8% compared to the previous month and 6.2% compared to the previous year.
Figures released last week by the Council of Mortgage Lenders, show a flattish market overall: home buyers borrowed £8.4bn in January, down 28% on December and unchanged on January 2016. This came to 45,700 loans, down 28% on December and 1% on January 2016.
Director general Paul Smee said the lull in moving activity appeared stubbornly persistent. “Buy-to-let house purchase activity continues to be weak, despite strong remortgage levels. This will likely remain so as lenders tighten affordability criteria ahead of the PRA mandated stress tests, and the introduction of tax changes in April.”
Number of loans for house purchase and remortgage
| House purchase | House purchase | House purchase | Remortgage | Remortgage | |
|---|---|---|---|---|---|
| FTBs | Movers | Buy-to-let | Home owners | Buy-to-let | |
| Jan-16 | 21,200 | 24,700 | 9,700 | 33,200 | 13,700 |
| Dec-16 | 31,900 | 31,500 | 6,400 | 27,700 | 11,200 |
| Jan-17 | 22,600 | 23,000 | 5,900 | 40,300 | 13,900 |
| 1 month change | -29.20% | -27.00% | -7.80% | 45.50% | 24.10% |
| 12 month change | 6.60% | -6.90% | -39.20% | 21.40% | 1.50% |
Source: Council of Mortgage Lenders
Rory Daly is chief executive at SDL Auctions
