Focus on: Property Trends at Auction

In our first focus piece, we look to discern the evolving landscape of property types over the past five years. What once reigned as popular investment choices may now stand transformed by economic shifts and legislative reforms, profoundly impacting investor and buyer sentiment. Armed with this insight, prospective investors may gain invaluable guidance to navigate the property market terrain, enabling them to make informed decisions about the safest investment avenues, whether they lean towards residential or commercial stock.

National Analysis

To provide a comprehensive analysis, we examined the entire unconditional auctions market over the past five years. We meticulously categorised every property, assigning each to its most relevant category. Additionally, we determined whether each property was residential, or had active or potential commercial uses.

This detailed categorisation allows us to discern patterns and trends within the market, shedding light on how different property types have performed and how market demands have shifted. By understanding these changes, we can better appreciate the evolving landscape of the property auction market and the factors driving its growth and transformation.

Breakdown

In the residential sector, property types generally grew at similar rates over the period, resulting in a relatively static percentage share. However, one category that saw its share increase over the past five years was terraced houses. Notably, this growth was primarily in the form of two- and three-bedroom terrace houses, as highlighted later in this report.

In the commercial arena, several property types have been competing for growth. Retail properties have fluctuated since Covid but have maintained a strong presence, accounting for 17% of the commercial market for the past two years. Land now represents 44% of non-residential stock sold through auction, reflecting its significant demand. Offices have remained a stable feature in the market. Despite the shift towards more businesses adopting work-from-home policies, the demand for office space persists. This demand can be attributed to the continued use of offices in their current form or the potential to transform these spaces into block accommodation using Permitted Development Rights.

Residential
2023-2024
Commercial
2023-2024
2019-2020 ? 2020-2021 ? 2021-2022 ? 2022-2023 ? 2023-2024 ?
Year runs from Q2 to Q1

Regarding the overall growth of the market in the past five years, HMOs/Blocks led the way with a remarkable 66% increase in auction sales compared to 2019, closely followed by garages at 62%. Residential properties as a whole experienced healthy increases, along with land and certain commercial properties such as mixed-use and office spaces.

However, there are now 31% fewer ground rent lots coming to auction compared to 2019, indicating the market's response to both the Leasehold Reform (Ground Rent) Act 2022 and the impending Leasehold and Freehold Reform Act. Despite this decline in quantity, the average sale prices of available ground rent opportunities have risen. This increase is driven by the inclusion of large-scale commercial ground rents and portfolios, which often feature added revenue options such as a share of income, enhancing the overall value of the freehold.

Five Year Growth by Property Type

Type % Growth
HMO/Block 66%
Garages 62%
Houses - Terraced 37%
Bungalow 36%
Houses - Semi-Detached 32%
Land 27%
Flats 22%
Office 8%
Mixed Use 3%
Houses - Detached 1%
Commercial - Other 0%
Retail -1%
Houses - Other -3%
Ground Rent -31%

Five Year Growth of Average Sale Price

Type Current Avg Sale Price % Growth
Ground Rent £96,916 78%
Office £487,736 41%
Houses - Other £230,947 30%
Houses - Detached £312,789 24%
Houses - Semi-Detached £189,211 23%
Mixed Use £383,487 23%
Bungalow £216,444 21%
Houses - Terraced £133,095 16%
Flats £172,254 15%
Commercial - Other £376,939 14%
Land £94,214 14%
HMO/Block £359,225 10%
Retail £344,917 5%
Garages £41,518 -3%

Key Growth in Residential Properties

With the overall increase in the residential sector, we delved deeper into which specific property types have become the most popular. In terms of volume, terraced 2- and 3-bed houses top the list, with 3-bed houses seeing a remarkable 43% growth over the past five years. Close behind are three-bed semi-detached houses, which have experienced 31% growth. Flats also remain strong and consistent, with 1- and 2-bed apartments seeing 22% and 24% growth, respectively.

Larger houses, specifically those with 5 or more bedrooms, have also increased in volume. This growth has been driven by a volatile environment in the broader property market, including a downturn in house prices over the past 12 months. Additionally, investor demand for properties suitable for conversion into HMOs/Blocks has increased, as these conversions offer higher potential returns. This trend reflects the ongoing shifts in market dynamics and investor strategies within the residential property sector.

3 Bed Semi-Detached 31%
5+ Bed Houses 39%
2 Bed Terraced 20%
3 Bed Terraced 43%
1 Bed Flats 22%
2 Bed Flats 24%

Regional Analysis

When examining the data at a regional level, noticeable variations emerge, reflecting the localised dynamics of the market. For instance, certain areas exhibit a higher volume of flats compared to houses, such as London and Scotland, while the Northeast leads in the prevalence of terraced properties. These regional disparities underscore how local infrastructure naturally influences the auctions market, providing prospective buyers with insights into which areas are optimal for finding their desired property type, particularly if location is not a primary concern.

In the commercial sector, distinct patterns also emerge. Retail properties are more commonly observed in northern regions, while land transactions are more prevalent across southern regions. Despite these regional differences, mixed-use properties maintain their strength across the majority of regions, indicating that the combination of residential and commercial opportunities remains a popular choice for investors. This resilience of mixed-use properties highlights their versatility and attractiveness to investors seeking diversified portfolios that can withstand market fluctuations.

London
Residential
2023-2024
2019-2020 ? 2020-2021 ? 2021-2022 ? 2022-2023 ? 2023-2024 ?
Year runs from Q2 to Q1
London
Commercial
2023-2024
2019-2020 ? 2020-2021 ? 2021-2022 ? 2022-2023 ? 2023-2024 ?
Year runs from Q2 to Q1
region-eastmidlands

Focus On: The Changing Landscape

Before the onset of the Covid pandemic, the ballroom auction reigned supreme, with an auctioneer commanding the rostrum, captivating and engaging hundreds of attendees as they fervently battled to secure winning bids. However, in the wake of lockdown measures, a significant transformation has occurred in the auction landscape.

Nowadays, the vast majority of sales are conducted online, leveraging either eBay-style bidding platforms or livestreamed auctions broadcast directly from the auctioneer's offices. While we may no longer experience the electrifying buzz of a packed auction room, the shift to an online environment has opened up the auction process, extending the opportunity to a much broader audience. Bidder participation is no longer restricted by geographical barriers; individuals can now participate and bid from the comfort of their own homes. Yet, amidst this evolution, a pertinent question arises: how has this shift impacted auctioneers? To uncover the intricacies of this transformation, we have meticulously analysed the market dynamics of auctioneers over the past five years.

Auctioneers across the UK

We reviewed all active auctioneers within each given year who sold at least one unconditional lot during the period, categorising their stock based on whether it was within their regional boundaries or outside them. Traditionally, auctioneers focused on properties within their local areas, with only a few outside London venturing further afield. However, the shift to online and livestream bidding has broadened their reach, allowing auctioneers across the country to tap into a wider audience and seize more opportunities.

Additionally, we examined the distribution of the auction market by region and calculated the average number of lots per auctioneer. This analysis reveals how the growing popularity of auctions has enabled auctioneers to increase their volume. The regional breakdown shows the dynamic changes in market share and highlights how auctioneers have adapted to new technologies and expanded their operations beyond traditional geographical limits. This shift not only reflects the evolving landscape of the auction market but also underscores the increasing competitiveness and innovation among auctioneers.

National

Year Percentage of In Region Stock Avg Lots sold per Auctioneer
2019-2020 61% 148
2020-2021 56% 177
2021-2022 55% 170
2022-2023 52% 158
2023-2024 49% 150
Year Region Share of all UK Stock Sold Avg Lots sold per Auctioneer
2018-2019 2% 49
2019-2020 1% 23
2020-2021 1% 26
2021-2022 1% 52
2022-2023 1% 61
Year Region Share of all UK Stock Sold Avg Lots sold per Auctioneer
2018-2019 1% 56
2019-2020 0% 20
2020-2021 0% 22
2021-2022 0% 27
2022-2023 0% 31
Year Region Share of all UK Stock Sold Avg Lots sold per Auctioneer
2018-2019 3% 37
2019-2020 4% 55
2020-2021 4% 61
2021-2022 5% 87
2022-2023 7% 147
Year Region Share of all UK Stock Sold Avg Lots sold per Auctioneer
2018-2019 1% 30
2019-2020 1% 27
2020-2021 1% 33
2021-2022 1% 47
2022-2023 2% 64
Year Region Share of all UK Stock Sold Avg Lots sold per Auctioneer
2019-2020 5% 44
2020-2021 4% 41
2021-2022 4% 47
2022-2023 4% 49
2023-2024 3% 35
Year Region Share of all UK Stock Sold Avg Lots sold per Auctioneer
2019-2020 4% 72
2020-2021 5% 98
2021-2022 4% 92
2022-2023 3% 88
2023-2024 3% 91
Year Region Share of all UK Stock Sold Avg Lots sold per Auctioneer
2019-2020 35% 194
2020-2021 36% 238
2021-2022 34% 251
2022-2023 41% 351
2023-2024 42% 398
Year Region Share of all UK Stock Sold Avg Lots sold per Auctioneer
2019-2020 4% 39
2020-2021 8% 92
2021-2022 10% 122
2022-2023 8% 110
2023-2024 6% 96
Year Region Share of all UK Stock Sold Avg Lots sold per Auctioneer
2019-2020 12% 65
2020-2021 13% 87
2021-2022 14% 105
2022-2023 11% 90
2023-2024 10% 99
Year Region Share of all UK Stock Sold Avg Lots sold per Auctioneer
2019-2020 6% 35
2020-2021 4% 26
2021-2022 5% 35
2022-2023 4% 35
2023-2024 4% 41
Year Region Share of all UK Stock Sold Avg Lots sold per Auctioneer
2019-2020 20% 113
2020-2021 17% 116
2021-2022 15% 113
2022-2023 12% 109
2023-2024 12% 115
Year Region Share of all UK Stock Sold Avg Lots sold per Auctioneer
2019-2020 3% 19
2020-2021 6% 51
2021-2022 6% 58
2022-2023 6% 71
2023-2024 6% 71
Year Region Share of all UK Stock Sold Avg Lots sold per Auctioneer
2019-2020 4% 14
2020-2021 3% 14
2021-2022 3% 16
2022-2023 4% 24
2023-2024 4% 27

Move the slider to see the changes over time

2019-2020 ? 2020-2021 ? 2021-2022 ? 2022-2023 ? 2023-2024 ?
Year runs from Q2 to Q1
Percentage of In Region Stock
2023-2024

In region refers to lots sold by an auctioneer located in the same region as the property.
Out of Region refers to any property sold which falls outside of the specified region of the auctioneer.

region-eastmidlands
Key: 0
400

Colour is defined by the average lots sold per auctioneer, and is not indicative as to region borders.

Review

There are more opportunities than ever for property auctioneers, thanks to the wider reach afforded by competitive online bidding methods. This trend is evident when reviewing the percentage of stock auctioneers are willing to take on, even when it falls outside their traditional areas. Nearly every region has experienced growth in average sold lots, despite an increase in the number of auctioneers during the same period. East Anglia is particularly notable, with auctioneer numbers growing by 42%, yet the average sold lots increased by nearly 300% during the same period.

London remains a standout region for property auctions, with average lots sold per auctioneer increasing by over 105% compared to 2019, despite the rising number of auctioneers. Impressively, 42% of all UK auction lots are now sold through London-based sales, with 83% of that stock located outside London boundaries. This demonstrates that moving auction rooms beyond purely physical attendance has created more opportunities nationwide.

The expansion of online and livestream bidding has not only increased accessibility for buyers but also allowed auctioneers to diversify their portfolios and expand their geographic reach, driving significant growth across the UK property auction market.


Regional Data

Every quarter we will be including regional data from the past five years, including the number of lots sold and the average sale price, and now average yield too. This allows you to track what is happening across the country, to spot trends, and see how changes in the wider market may be affecting auctions.

The data in these charts consist of all auction sales on a quarterly basis, including individual single lot sales.

Data for all unconditional auction sales.

Data for all unconditional auction sales where there is an income.

London
South East Home Counties
South West
Yorkshire & The Humber
North West
North East
West Midlands
East Midlands
East Anglia
Scotland
Wales
North West Home Counties
Northern Ireland

Regional Data Analysis

It is evident that broader economic impacts reverberate across various regions, exemplified by the repercussions of Covid-induced lockdowns on the auction market in 2020. Additionally, the noteworthy surge in properties entering the auction sphere in 2023 further underscores the dynamic nature of the market. While analysing the significance of this data, it is imperative to consider the volume of lots being reviewed, especially in less bustling regions where more pronounced fluctuations may occur owing to the comparatively smaller datasets at play.


Closing Summary

In our comprehensive exploration of the property auction market spanning the past five years, we've uncovered profound transformations and insightful trends reshaping the landscape of auctions. From the dramatic shift towards online sales in the aftermath of Covid lockdowns to the evolving preferences in property types, our analysis has illuminated the dynamic forces driving change in the market. Notably, the rise of online bidding platforms has opened the access to auctions, fostering broader participation and expanding opportunities for both buyers and auctioneers.

As we conclude this review, it's evident that the property auction arena continues to evolve, propelled by innovation, resilience, and adaptability, paving the way for a vibrant and dynamic future in property auctions across the UK. As always, EIG remains dedicated to closely monitoring and reporting on the latest trends and developments across the property auction arena, empowering you to make informed decisions and seize opportunities in a constantly evolving market.

David Leary

If there are any topics you would like us to focus on in future releases, or you have any feedback or thoughts you would like to share, please contact us on insights@eigroup.co.uk.

David Leary

PS. Our next edition will be released in September 2024, so if you are not already on our newsletter mailing list, sign up today!

Disclaimer: The figures in this newsletter are based on sales data provided to us by the auctioneers.