Who’s in the auction market and what are they buying?

Commitment to buying

The survey of just under 500 respondents found that buyers are increasingly turning to auctions as a way of securing a property, whether that is for their own use or as an investment or development opportunity. This chimes with analysis of our past auctions which shows a 133% uptick in the number of new bidders across 2024 vs 2021. Repeat bidders accounted for 36% of the total number of registrations last year.

Of those surveyed, 34% of aspiring buyers said that their appetite to buy at auction had increased over the past three months, with more than a third (+35%) agreeing they had increased their budget, too.

Meanwhile, investors looking to purchase commercial stock and people buying a home for their own occupation showed the strongest improvement in commitment to buy, (25% and 26% respectively). Commercial buyers were more likely to have increased their budgets (net balance of +63%) versus those purchasing residential assets.

The return to a more stable financial environment following a change in government and the autumn budget fostered a more positive outlook among potential buyers and sellers, despite ongoing borrowing costs, and there’s been a strong seam of demand in the auction market, particularly among residential investors and redevelopers. 

Cash investors dominate

Since the pandemic, auctions have become a more accessible route to purchase with buyers benefiting from the value on offer, together with the speed and certainty of transactions.

Investors made up the majority of those looking to purchase at auction (25%) followed by opportunistic buyers (22%) and those acquiring for their own use (18%). The vast majority (68%) funded their purchases with cash, while those borrowing in order to facilitate their purchases acted with a degree of caution as they waited for the Bank of England to lower the base rate. 

Most buyers (33%) were looking to acquire a property to refurbish or redevelop, followed by residential investment (25%).

However, this could shift as increasing regulation within the private rented sector may push second homeowners and portfolio landlords to exit the market. Investors buying market let residential stock obtained an average gross yield of 11.1% though that varied significantly by reference to the nature of stock purchased.

Attitudes to risk

Contrary to common perception, those purchasing at auction are not great risk takers. Typically they buy only when they feel they know what they are in for, although they will be more liberal when it comes to what they buy and where. 

Just over half (58%) of residential owner-occupiers surveyed said that they would only bid for a home when they know it represents fair value and minimal risk. By contrast, 13% of all respondents were comfortable taking a moderate to high degree of risk.

This cautious approach is especially evident among first-time auction buyers. Half (44%) agreed that they would only consider a specific type of property in a particular location. More seasoned buyers, however, are more likely to be flexible with asset class and location.

Further information

Contact Gary Murphy

Savills Property Auctions