The UK’s second-largest residential auction house said this week it would be more selective about which lots it takes to the room after seeing its success rate fall to 65% at its latest sale.
Savills raised almost £27.9m at its auction on 19 June, selling 106 of 164 lots offered. This total was down by £14m on its May sale when it offered the same number of lots but sold 82%.
Paul Mooney, Savills’ director and auctioneer, said: “We have to be ultra careful. Some of the things we took in [to auction] we shouldn’t have. It wasn’t the easiest of days – the market is unpredictable and cautious.
“It may mean the catalogue shrinks in size, and we might have to ride a couple of auctions. Who knows what July is going to be like?” he said.
Mooney said owner-occupier buyers and buy-to-let investors, who add “froth” to the market, were not purchasing property at present, and the dealers left in the market were “hard-nosed”.
However, he doesn’t believe the dip in the market is serious. He said: “It doesn’t feel like 2008. People are just standing by. It is business as usual for the right stock, but there are pockets of London that are struggling at the moment.”
Savills’ head of auctions, Chris Coleman-Smith, warned last week that sellers’ expectations were out of line with where the market is.
“It is a bit of a buyer’s market now, and you have to make a property attractive for the buyers,” he said.
In Savills’ latest sale at the London Marriott Hotel, two lots sold for around £100,000 above their guide.
A three-floor terraced house in Walworth, SE17, sold for £867,000 off a guide of £770,000, and a semi-detached house in Brockley, SE4, with a guide price of £420,000, was purchased for £538,000.
An unmodernised terraced house in Kennington, SE11, sold for £925,000 from a guide of £850,000-plus. Two flats in the same property in Cricklewood, NW2, sold for £424,000 and £350,000 off guides of £357,000 and £298,000 respectively.
Mooney said that his staff were busy post-auction and that he expected more lots to sell.
Outside London, a single lot comprising two Poundland stores in the West Midlands with potential for residential redevelopment of the upper floors failed to sell and is still available at £1.8m.
Savills achieved a market share of nearly 10% last year, and an average success rate of 78.8% from eight sales.
London residential performance
London residential auction sales fell by 16% to £187m from March to May this year, compared with the same period last year. The average success rate for the period also dropped by 5.6% to 72.5%. Lots offered and sold fell by 12.4% and 17.3% to 585 and 424 respectively, according to Essential Information Group.
These statistics reflect the climate in the London residential market as a whole, with higher rates of stamp duty, the 3% surcharge for additional homes and Brexit uncertainty all having an effect.
Savills’ recent Mind the Gap report, which looked at the mismatch between the expectations of buyers and sellers in prime London, also highlighted how overseas buyers were being deterred by capital gains tax and inheritance tax despite the weaker pound.
In the report, Lucian Cook, director of Savills’ residential research, warned: “Looking ahead, the market will remain price sensitive during the next 18 to 24 months.”
