Many landlords, despite recent rental growth, are no longer seeing the returns they once did and as a result, may be looking to offload properties quickly thus bringing more stock under the hammer. With a tighter regulatory framework on the horizon, we expect to see more selective bidding and a growing divide between amateur investors, and seasoned landlords seeking opportunities through auction.
The demand for our online auctions has grown year on year, and with the swift passage of the Renters’ Rights Bill and government aspirations to increase minimum energy efficiency standards, more sellers may turn to auctions as a means of disposal.
Who’s likely to be buying?
Our recent analysis of the auctions market found that first-time buyers, downsizers, second home seekers and private developers will be the leading players in the auction room this year, and that vacant single houses and flats will remain the most popular sales assets.
From experience, we know that the opportunity to add value is crucial – making realistic pricing essential to garnering interest and building momentum on auction day. A well-priced lot appeals to a broader pool of buyers and, driven by auction excitement, can often exceed expectations. Without this, sellers may struggle to offload assets – especially if facing remortgaging deadlines or financial year-end targets.
Institutions and corporate investors typically acquire their portfolios privately and are unlikely to buy individual lots at auction. However, when these assets are strategically pruned, more often than not the surplus stock is sold off at auction. We expect this will predominantly be single, family houses rather than blocks of flats.
Other trends affecting the auction market this year include:
Public sector and social housing
We expect local authorities and housing associations to continue to bring stock to market that compromises their commitments to reach net zero or the ability to meet building safety obligations without substantial investment.
Risk taking
Buyers at auction are not great risk takers. Rather they will price strategically according to the level of risk. Our recent buyer survey showed that while this was felt more keenly among residential owner occupiers, 44% of all respondents would consider a property that presents a moderate degree of risk, but not before weighing up the financial implications.
Mortgagors and mortgagees
We don’t expect a significant rise in stock from lenders, as tighter mortgage regulations since the mid-2010s have helped limit repossessions. Lenders’ proactive support has eased the impact of high interest rates, and fewer borrowers will face sudden mortgage cost increases. While those coming off five-year fixes will see higher outgoings, they’ve had time to prepare. Meanwhile, potential rate cuts could offer relief, and those exiting two-year fixes may even see lower mortgage costs, having already weathered the peak of higher rates.
Bidders will continue to respond to sales advertised on behalf of housing associations, local authorities, executors and mortgagees. We know that these sellers understand the impact on demand of realistic pricing and a demonstration of commitment to the auction process.
Added to this, failing REITS (Real Estate Investment Trusts) will continue to swell the supply of single units as asset managers and administrators seek an efficient exit for distressed stock.
Despite upcoming changes reshaping the property market, 2025 looks set to be a year of growth and opportunity for auctions. With realistic pricing key across all sectors, buyers and sellers will be required to navigate challenges in pursuit of the potential rewards.
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