7th March 2024

Why are so many houses going to auction? The increased demand for property auctions

Over the past few years, the UK property market has seen some substantial changes in the way that investors and homeowners are choosing to buy and sell real estate, with more and more properties going to auction. Historically, auctions have been seen as a niche market for investors and developers, which has led to misconceptions about the types of properties being sold at auction. However, the potential that auctions present for first-time buyers, landlords, and those looking to sell their current homes has started to become realised, with more people choosing this method.

Fuelled by an increased demand for property, alongside the need for a faster, simpler way of selling, there are plenty of contributing factors that are driving this upward trend within the industry. Read on to learn more about the rising popularity of buying and selling by auction.

Why do people sell houses by auction?

Many are under the misapprehension that houses sold by auction require significant repairs or are unmortgageable which makes them suitable only for experienced investors or developers. However, this is not always the case. Whilst auctions do present these kinds of opportunities, those who are looking to make a quick sale on their current home or tenanted property may choose to sell via auctions. In the first half of 2023 alone, a 22.1% increase in the number of properties listed for auction compared to the previous year was seen, a number which continues to grow.

In addition to this, properties sold at auction on average achieve 85-90% of their market value, but property completion is done at a much quicker rate making it appealing to both buyers and sellers. A quick selling method is not the only appeal, as auctions provide security to both parties significantly reducing the chances of gazumping and gazundering or a sale falling through, eliminating lengthy chains.

Is it worth selling a house by auction?

There are plenty of factors to consider if you’re thinking about selling by auction, including the type of property you’re selling and what goals you want to achieve. To summarise the contributing factors to the rising popularity of selling by auction, many people will find choosing the auction method worthwhile because: 

• The selling process is fast, straightforward, transparent and efficient.
• The sale is legally binding and offers more certainty and security than the open market.
• Properties can still achieve a high sale price without lengthy negotiations.
• There is a diversified range of buyers at auction. 

To help you make an informed decision about whether this method is right for you, please refer to our guide to selling and full Advice Hub for further information.

Why buy at a property auction?

Property auctions have always attracted a niche market of investors and developers looking for their next investment opportunity. However, with an increased number of people choosing to sell by auction, the range of buyers has further increased. With more properties to choose from, potential buyers could be looking to flip property, earn a rental income or find a new home. As such, there are plenty of reasons why buying at auction makes sense for those looking to increase their portfolio. Many of the benefits of selling at auction also apply to buyers, with quicker and more certain sales and access to a wide range of properties. In addition to these benefits, other external factors have influenced the buying market such as: 

• Higher mortgage rates for both residential and buy-to-let properties have led potential buyers to seek fairer prices or choose to cash-buy.
• The cost of living crisis has contributed to a slowdown of the housing market, leading property owners to sell any unwanted property in a way that is more resilient to volatile markets. 
• Problem properties can be sold at auction alongside residential and commercial lots, providing plenty of opportunities for a diverse range of buyers.

Is it risky to buy a property at auction?

There are risks associated with any purchase of a property, no matter the method of sale. A common misconception about auction properties is that the lots sold can’t be viewed or are being sold due to a myriad of problems. However, in most cases auction properties are open for viewings and any known problems will be detailed in the legal pack. As long as you are diligent about your research, you shouldn’t be faced with much risk when buying at auction. To learn more about this method of purchase, refer to our useful guide to buying a property at auction.

How much are property auctions growing in popularity?

Whilst property auctions are quickly gaining more momentum, only around 2.5% of total property sales are done via auction. To give a clearer picture of the kinds of growth auction houses are seeing, we can look more closely at the data. According to data taken in October 2023, there was an 8.7% increase in total lots listed for auction and a 7.8% increase in lots sold by auction. For residential properties, growth saw a 5.7% increase in lots listed and a 6.4% rise in lots sold, and commercial properties saw an increase of 39.3% in listed properties and an increase of 22.0% for properties sold. It is worth noting that these represent the nation as a whole, and figures may differ between regions. 

To put this into perspective about what this growth means for us, in our last auction we saw 1,500 registered bidders and 2237 bids, processed over 1,000 viewing requests and raised over £30m for our buyers. 

Diversify or streamline your portfolio with SDL Property Auctions

As the benefits of buying and selling property by auction become more apparent to those outside of those with development and investor backgrounds, more audiences are choosing auctions as their preferred method of sale. 

If you have been enticed by the upward trend of selling and buying by auction, visit our website to view lots in our upcoming Auction Events and Timed Auctions. Alternatively, you can contact us with any further enquiries or receive a no-obligation valuation by clicking the button below.