Auction houses in Scotland and the north of England recorded the largest declines in turnover last year, faring much worse than their Southern counterparts.
Essential Information Group’s 2010 figures show that Scotland-based SVA Property Auctions recorded the largest decline in revenues last year, raising just £5m from its residential sales. This compares with £11.4m in 2009, reflecting a drop of 56%.
Pattinson Property Auctions, based in the North East, was not far behind SVA in terms of declining fortunes. Its turnover dropped by 49% to £40.5m – down from £79.5m in 2009.
Eddisons, for the Yorkshire & Humber region, showed the third largest decline in sales.
Turnover dropped by 30%, from £53.5m in 2009 to £37.7m last year.
Just two out of the 12 leading auction houses in EG‘s regional league table saw revenues rise last year.
Graham Penny Auctions in the East Midlands recorded a 7% increase in turnover to £33m, up from £31m in 2009, while Bigwood in the West Midlands recorded a 6% hike in revenues, to £38.6m. This was up from £36m a year earlier.
Looking ahead to 2011, auctioneers said that cutbacks in public sector employment and the increase in VAT to 20% would affect business.
Senior economists have predicted that property prices could drop by between 2% and 6% this year as a result, which means that in order to keep revenues and success rates in positive territory, auction houses will need to be resolute about stock selection and give realistic valuations.
Rory Daly, managing director of Bigwood, said: “People have had to lower their sights. The market has now returned to its traditional base, where things can no longer be bought to turn.They are being bought now on the basis that buyers can add value. There are no short-term trading opportunities.”
He added: “Our message to the market this year is that price is critical. If vendors do not accept a realistic valuation, they will not have a successful sale.”
Graham Penny, founder of Graham Penny Auctions, agreed. He said: “We have had relatively strong demand for correctly priced residential investment stock, returning yields of between 7% and 8%.
“There is still a market but it is price sensitive.”
National Auctioneers Property Index Tables
The index was formulated through designating the status of all auction houses as either commercial or residential. However, it should be noted that many residential auction houses also offer a range of commercial or mixed-use lots.The index compares relative performance on a yearly basis with those achieved the year before. The graph shows the value of lots sold in auctions between 2008 and 2010 on a quarterly basis.
