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Deadlock In The Auction Room

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Some bear food from the auction rooms.

Looks like the only thing keeping the market going at all is a few BTL parasites trying to catch a falling knife...

http://www.guardian.co.uk/business/2008/ju...et.creditcrunch

"Let's start at 50, anyone for 50?" asks the auctioneer. The packed room remains silent until one angry man runs breathlessly through the crowd and stops the proceedings in their tracks. "No," he shouts. "I told you I can't take less than 55."

The auction in a hotel in Southend-on-sea provides a new window from which to see how the credit crunch is taking its toll on the housing market. For this desperate homeowner the view was not a welcome one - there were no bidders for his flat.

Auctions across the country reveal the same picture with auctioneers and vendors deadlocked. The former are telling the latter that if they want to sell their houses, they have to lower their prices significantly, but sellers can't afford to do it. Conversely buyers can afford to wait before taking the plunge, knowing that prices are more likely to fall this year than go up.

The auction business, which should be profiting from an increase in repossessed properties this year, has also been hit by the problems in the mortgage market which has made it harder for would-be buyers to obtain financing.

Terence Hair, director of property consultants Hair & Son, who conducted the Southend sale, said: "Even those you would regard as ideal auction properties have to be priced competitively in order to attract genuine interest. If you're seeking to achieve the same prices as last year, you will fail."

Online auctions have increased in popularity, boosted by the belief among disappointed vendors that they might be able to sell on the internet what they failed to sell at normal auctions.

"We are having more email enquiries asking how it works from seemingly desperate people," said Andrew Binstock, founder of auctionyourproperty.com. But he added that vendors were "wasting their time" if they put their properties up for sale at high prices. "I'm telling people if they think their property's worth £100,000, then put it up for £70,000 or £80,000."

Figures yesterday underlined the problem facing the sector. Data from the Essential Information Group showed that in the period March-May, 4,748 residential properties were sold at auction, compared with 5,910 in the same period last year - a difference of nearly 20%.

A Liberal Democrat Treasury spokesman said: "Average sale prices from all round the country are down 17% on the last quarter and 18.5% since last month compared to last year."

Demand has subsided as a result of lenders removing mortgage packages from the market and rising interest rates. The British Bankers' Association (BBA) said last month that mortgage approvals for house purchases fell 56% from May 2007, the biggest drop since the series began in 1997. The monthly drop of 20% between April and May this year was the biggest on record and the figure of 28,000 mortgages approved was the lowest on record.

Refinancing difficulties

Charles Smailes, auctioneer at Feather Smailes & Scales in Harrogate, said: "Demand has dropped to nothing. It's like the property market has fallen off a cliff."

At their auction last week, 10 lots were offered but seven were withdrawn owing to lack of bids. Out of the 16 properties up for sale at the Southend auction, only nine were sold. Out of those nine, six were sold below their asking price.

There are some people, however, who are taking advantage of the weak housing market. Property developer Martin Taylor said the "recent drop in house prices has been beneficial". He has bought 18 properties in the past year. "Properties must be cheap, or they won't sell," he added.

Chris Glenn at estate agents Barnard Marcus believes that property investors are starting to struggle in the midst of the credit crisis. "There has been an influx of buy-to-let stock over the past few years. People were building up portfolios but this is now slowing down due to buy-to-let investors finding it difficult to refinance properties."

The number of repossessions at auction has increased rapidly over the past year with the Royal Institution of Chartered Surveyors predicting that the number of repossessions at auction would increase by 50% to more than 45,000 by the end of the year.

The Essential Information Group said that the number of lots offered rose 3.6% to 8,304 in the period March-May compared to a year earlier but most auctioneers believe that the bulk of this new stock is repossessions.

Oliver Gilmartin, senior economist at RICS, said: "We forecast repossessions to increase by 50% by the end of the year. Therefore, lots should increase but we expect success rates to decrease because of funding issues due to lack of available mortgages on the market."

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hmm can't sell won't sell .... only a matter of time ... the ones that sell now will be the lucky ones.... its only going to get worse... "can't take less than 55"? really ? why not ? don't argue with the market.... it will only end up making a fool of you ..

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hmm can't sell won't sell .... only a matter of time ... the ones that sell now will be the lucky ones.... its only going to get worse... "can't take less than 55"? really ? why not ? don't argue with the market.... it will only end up making a fool of you ..

Can we look forward to angry men standing on their doorsteps shouting 'Buy my house!' in the same voice as Alan Patridge shouting 'Smell my cheese!'

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Some bear food from the auction rooms.

Looks like the only thing keeping the market going at all is a few BTL parasites trying to catch a falling knife...

http://www.guardian.co.uk/business/2008/ju...et.creditcrunch

This does support comments I've made on other threads recently. Post Easter we saw a definite dip in prices in this area, since then no properties have sold in any significant numbers yet house prices remain stubbornly above historic norms, I suspect there's a growing realisation amongst both buyers and sellers that the tide has turned but no-one is willing to make the first move. Sellers are thinking to themselves "What if I sell my house for what it's really worth but nobody else does?".

The market price is now being set by forced sales and these are a long way from working their way through the county courts in any real numbers. Expect a slow turn and then a sudden dip - this Autumn maybe? by Spring 2009 certainly, thereafter the wave of forced sellers will drive the market down throughout 2009.

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hmm can't sell won't sell .... only a matter of time ... the ones that sell now will be the lucky ones.... its only going to get worse... "can't take less than 55"? really ? why not ? don't argue with the market.... it will only end up making a fool of you ..

If he's in NE and can't make up the shortfall, he literally can't sell -- remember that the lender has a charge on the property.

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do auction prices get into the halifax/nationwide data?

i guess it depends if they're bought with a halifax/nationwide mortgage?

otherwise have to wait until land registry data(8 month lag?)

cos we have newbuild flats down 40%.. i dont think that's in the stats yet!

:)

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  • 400 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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