Be Realistic! Warning to investors selling at auction

An online property auction expert says investors and all others selling by auction in 2024 must be realistic on pricing.

Stuart Collar Brown, director and founder of My Auction, says: “The popularity of buying and selling at auction has been steadily rising this year as more start to see the value and advantages of doing so.” 

Despite this, he says that vendors must still approach auctions with a realistic view of the worth of their property. Recent Essential Information Group figures show that there has been a significant rise this year of 2,391 more properties being listed multiple times at auction due to not selling the first time. 

Although this can be the result of many factors, Brown warns that an unrealistic view of the market from a vendor’s perspective is often the main reason for this. 

However, he says that one of the advantages of selling a property by auction is the certainty of sale. “Contracts are exchanged when the gavel falls which creates a faster turnaround time (four weeks compared to twelve weeks in private treaty), and transparency. This is particularly useful for those who need to complete before their existing mortgage offers expire and they must reapply with higher borrowing rates.” 

With regards to the wider housing market, Brown says that the reality is, that those who stretched themselves because money was cheap and mortgage rates were sub-two per cent five years ago could find themselves in trouble in early 2024. 

He says the market has corrected itself in the past 12 months regarding property values. This means their renewed mortgage could add £1,000 or more to their existing monthly outgoings. “This will be the story of 2024. Mortgage arrears and insolvencies will go up exponentially and thousands will need to sell their properties quickly to get out of a financial hole. If the buyers are not there, however, or won’t pay market value, these sellers will have to take a huge hit on price or give the keys back. This has serious implications for the market. Couple this with a General Election on the horizon which historically reduces market activity significantly until buyers and sellers get an idea of who is going to be in Government next. People need to get ready for a very slow and tentative market next year.”

He also cautions that property investment is likely to lose its appeal. 

“It’s been a hard year for landlords – the leasehold reform bill, changes to EPC ratings, higher interest rates and continual red tape have made it difficult unless you are a portfolio landlord. As interest rates have gone up, property investment has become a less attractive option as the yields are no longer worthwhile. This factor alone suggests that the price for investment property is likely to fall as investors fight to offload stock. The savvier landlords are getting out while they can and selling quickly through property auctions. Others will ride the storm until they get back at least what they paid for it.”

Brown adds that as always the only winners in this market are cash buyers – for anyone else the profit margin is no longer there and won’t be for a while. But for those that can, the competition for good rental properties will be high so he believes that we will continue to see rising demand from portfolio landlords and subsequently, higher rental rates.