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March 1, 2010
Auction Rooms Filling Up Again
The New Year started with auction rooms filling up with a variety of determined developers and investors who survived the economic downturn and they are buying more than ever before.
In the spring of 2009 there was an increased activity in the auction room as prices fell by 25 per cent. All of the sudden, owner-occupiers, small developers and even first-time buyers hoping to find an attractive deal started to participate.
The fact that Savills and Allsop both sold about 90 per cent of their catalogues in their most recent auctions indicates that practised investors have returned and, despite higher prices caused by a shortage of stock, are actively involved in the current market. Furthermore there are investors who are keen to buy things they can do up and sell on.
David Sandeman, director of the Essential Information Group (EIG), an auction information service, says that prices have return to pre-2008 levels with many properties selling for far more than their guide price. This clearly benefits sellers and not buyers who may find prices similar to the ones during the boom years rather than of repossession opportunities. Stock has fallen dramatically and the number of residential auction properties available in January fell by 62 per cent compared with the same month last year. The latter in combination with the fact that the best opportunities are removed from the catalogue prior to the auction puts a further strain on buyers who are faced with uncertainty in regards to the current market.
However, Mark Tanton, managing director of Countrywide stated that is difficult to predict the market before the election because if interest rates start to climb, unemployment continues to worsen and there are more repossessions, auction houses could experience a surge in stock.