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A year under the hammer - Samuel Wagner, BidProp.co.uk

Property Auctions - A year under the hammer

Property auctions have changed drastically over the past year. The Sunday Times reports that just twelve months ago, over a third of homes going through auction were repossessions but now these represent less than ten per cent of transactions. Government pressure, low interest rates, and a pick up in the property market have all contributed to this but the geographic locations of the lots are notable. Almost none of the repossessions are in southern England – the few repossessions coming through auction are almost exclusively from the north of England.

According to one research report, homes in the south are selling in approximately six weeks but are taking twice as long to shift in the north. House prices have also accelerated faster in southern England and despite the housing crash, the average house price in London is £302,411 while those up north are only £106,769 according to the Land Registry. The north/south divide is growing by the day and has been exacerbated by the recession.

Nowhere is this more apparent than in northern City centres. Large blocks of flats were built specutively and aimed at buy-to-let investors who thought they could fill them with young, professional tenants. These tenants proved to be few and far between, and most of the flats sat empty. Facing mounting loses, many investors sold the flats for less than they bought them for or even handed the keys back to the bank.

These northern City centre flats comprise the bulk of repossessions coming through auction houses. What is more, banks are extremely reluctant to lend on these flats going forward. Only 27 per cent of The Nationwide’s mortgages were to northerners; the rest to those living in the South. An even smaller percentage was lent on city centre flats, most of which are being severely down valued. With lending restricted and no tenants to be had, things do not look good for owners of these flats. People in the north also tend to borrow more – on average 75 per cent – than their counterparts in the south. With such high gearing, things look precarious.

No auctioneer wants to see repossessions. Each one represents someone’s personal heartache but we need to build homes that actually reflect society’s needs. Many of these flats were built on the basis that ‘if we build it, they will come’. City centre living was unproven, though, and while I think these flats will eventually find buyers and occupants, it may take years.

Samuel Wagner

Samuel Wagner is the director of BidProp, a new online property auction website that works with professional sellers to accelerate the sale of residential properties in Greater London.

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