Auctions Hammered

Half of all residential property lots are failing to sell in the auction room, and half of vendors are being turned away because they have unrealistically high guide prices. But these are not the only hallmarks of today's salesrooms.

At Allsop's auction sales on May 29 and June 2, 38% of lots were repossessions, compared with 10-15% this time a year ago.

Transactions are also falling, from 74% a year ago to little over half now. However, that does not mean that sales are not taking place: savvy investors are waiting until a property fails to sell under the hammer and making their move the following day. In many cases, properties are changing hands for some10% less than the reserve price - which in itself is the rock bottom price that the vendor had been prepared to accept.

Tony Webber of Eddisons, property auctioneers in Leeds and Manchester, reported that at their May sale, just 14 of the 46 residential lots offered sold successfully. "There was very little appetite in the residential section of the sale, which has declined significantly over recent months," he said.

As for reserves, Gary Murphy, auctioneer at Allsop, the UK's largest auctioneers, said: "We only list lots that we can sell in this market. We need to prepare a catalogue that is not going to waste buyers' time. Auctions are there to create competition. There is no point setting reserves at a high level."

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