It is often said that property auctions are a barometer of the property market and on pricing trends going forward. But such is the magnitude of the coronavirus pandemic it is difficult to see how reliable a guide that even auctions could be. However, in this report we will take a look at the impact the situation is having on buyer and seller activity in auction houses around the country and take in some best educated guesses from auctioneers on what impact it could have on pricing.
Gary Murphy, auctioneer at Allsop in London, tells us how buyer and seller interest is holding up: “We held a major online auction sale on the 2nd and 3rd of April. Originally this had been planned as an ‘in room’ auction to be held on the 31st of March. The catalogue started out with nearly 290 lots. We withdrew around 90 lots prior to the auction date offering 197 on the day. To date over 80% of lots offered have been successfully sold and we have raised over £30m in sales.
“This is a clear indication that buyer interest is sustained. There was little evidence that values had fallen. Naturally, bidders will be looking for opportunity. However, as long as sellers maintain realistic expectations, we anticipate keen competition for available stock.”
On the challenges the situation is posing to the auction process Murphy says: “One of the challenges that will face all auction houses over the coming months is the difficulty of showing vacant properties to prospective bidders. Allsop is using virtual video tours. We sold 71 properties that were vacant at our April online sale. Of those buyers surveyed, 86% had not made an internal inspection.”
He reminds bidders of the importance of completing due diligence as ever and advises them to take into account additional rules and preparations that online sales can involve. In Allsop’s case these involve pre-registration, anti-money laundering checks and a payment of up to £10,000 as bidder security in advance.
On pricing ahead Murphy says: “It is extremely difficult to assess the future impact of coronavirus on auction pricing. It is clear that prices are likely to be impacted in some way. Auctioneers and their clients are best advised to adopt a modest approach. The auction room is the only truly functioning marketplace for trading commercial and residential property at the moment. The private treaty market has virtually come to a halt. All eyes will therefore be on the virtual auction rooms for guidance as to where pricing is heading during this crisis.”