Why are auctions an increasingly popular opportunity for landlords and investors?

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by Victoria Barnard, Business Development Manager

What happened in the Auction Market in 2023? 22.1%: The YoY growth in the number of properties listed for auction in Jan-Jul 2023 82%: The sale rate at auction in 2023 (Auction House London) 33.77%: Increase in properties for offered for sale in 2023 compared to 2022 85%-90%: Average sale value of a house sold at auction compared to market value

What caused the increase in popularity for property auctions?

Other than the opportunity to appear on Homes Under The Hammer, the speed of auctioning a property is appreciated by both sellers and buyers alike. 

Traditional timelines set by selling a property can be bypassed by auctioning it, as well as avoiding the negotiation process. 

On average, properties sell between 85% to 90% of their market value at auction. Making property auctions an enticing prospect for property investors in the UK. 

Over the past 10 years, property auctions have been struggling to gain transaction. 

The high buyer demand in 2020 and 2021 (while interest rates were low) caused a backlog in the property market, and as sellers were pressured by the cost-of-living crisis in 2021 and 2022, more properties were put to auction to avoid the tedious process of selling on the traditional market. 

So that’s the supply side change; but what about demand? As always, purchasing at auction has always appealed to your property investor customers. 

Be they looking for a rental at the end, or to flip the home, being able to purchase homes quickly at often slightly below market value creates lots of incentives and opportunity to meet the demands of renters and homebuyers and turn a profit.

A challenging 2023 economy

In the first three months of 2023, there were 3.085 mortgage possession claims and 718 repossessions, an increase of 40% and 24% respectively on the same quarter 2022. 

The challenging economic conditions of the past few years, coupled with increased mortgage rates, has sadly made repossessions all the more common, which was reflected in the higher number of properties available for auction we saw last year. Auction is often the preferred route of lenders trying to quickly recoup mortgage costs and losses on a repossessed home.

This caused a boom in properties like; houses, flats and land for development during the first half of 2023 (see below).

Providing valuable opportunities for property investors in the UK. 

For this and more, download our free guide to Auction Finance.