Auction Market Update - freehold properties finding favour with buyers

The auction market in 2022 continues to be robust, with freehold properties in all sectors continuing to find favour with auction buyers.

In our July auction, we sold one of the largest-ever residential investment properties and the highest-ever lot to be auctioned in E3. Temple Dwellings was an unbroken freehold mansion block of 24 apartments that sold for a fantastic £7,500,000, somewhat undermining the myth that only cheap, dilapidated properties can be sold at auction.

Industrial and warehousing sites are also highly sought after. However, auction buyers are still very conscious of getting good value, and lots that look overpriced will invariably attract less attention. As ever, there is no shortage of buyers for well-priced stock with an angle to add value.

In our recent September sale, we were able to sell a vacant shop with undeveloped upper parts on Station Road in Chingford. The property was in a pretty sorry state, but the savvy buyers at our auction could spot its potential for redevelopment and repurposing. From its modest guide price of £305,000 plus, one lucky bidder took it away for £438,000. He's looking to convert the upper floor into a flat and renovate the shop. Both buyer and seller were delighted with the result.

Some sectors of the market face more significant challenges, particularly concerning development land lots. A shortage of skilled builders following Brexit and increased building material costs have meant that construction costs have increased in the last 12 months, impacting the price developers are prepared to pay for land. But again, we have seen some terrific results for land that is sensibly guided.

One of the topics of conversation that still lingers is the subject of the return of ballroom auctions. I think the jury is still out on when this might be, and I would go so far as to say that it is now a case of "if" rather than "when". I have said this before, but ultimately, this decision will have to be client-led. Our feedback is that people are comfortable with remote sales and our strong results prove that we can operate well digitally.

The lifting of restrictions on public gatherings hasn't seen a collective desire to push for a return to ballroom auctions, but we will continue to assess what the appetite is from our clients.

There will have to be a compelling reason to return to the ballroom. Nostalgia and our enjoyment of the event isn't good enough reason. Our job is to get the best price for our clients, and it will then be up to auctioneers to decide which is the best way to achieve that, digitally or in the ballroom.

The industry has responded well to the auctions world moving online during the pandemic. I think there is more of a difference of opinion than I expected there to be when it comes to whether people prefer an in-room or virtual sale.

Virtual auctions have lessened the auction day's overall 'theatre', and many people do miss that, no one more so than me. I also really miss the interaction between buyers and sellers. Ballroom sales allow networking, meeting people and catching up with clients. This is much harder to replicate digitally.

Since auctions moved online, we have a much wider net of potential buyers. Not being in an auction room full of seasoned bidders has also made the process less intimidating for new bidders, and this has given people more confidence to buy at auction.

I think it will come down to personal preference for many auction-goers, but as auctioneers, we are here to achieve the best price for our clients. Working closely with our clients will help us decide the best way to do that, digitally or in the ballroom.

As we move forward, we may consider combining both approaches, therefore catering for the preferences of a broader range of sellers and buyers. Given our swift response to bringing auctions online and their success, I would say that anything is possible. The successful comeback of auctions to the pandemic has taught us to be bold, creative and to 'think outside the box' to capture and retain a wider market. We've got the confidence and experience to build on this, so whichever way we present auctions in the future, here at Strettons, we are looking forward with optimism.