Vendors must be ‘more realistic’ about auction sales - warning

Increasing numbers of auction sales are at risk of failing in 2024 if vendors don’t adjust their expectations, an auctioneer claims.

Stuart Collar Brown, director of online auctioneer My Auction, said putting homes under the hammer has become more popular this year but vendors must still approach auctions with a realistic view of the worth of their property. 

While selling at auction can provide more certainty, recent Essential Information Group figures show there have been 2,391 more properties listed multiple times at auction this year due to not selling the first time. 

Although this can be the result of many factors, Collar Brown said an unrealistic view of the market from a vendor’s perspective is often the main reason.

He suggests those who stretched themselves because money was cheap and mortgage rates were sub-2% five years ago could find themselves in trouble in early 2024.

Collar Brown said: “This will be the story of 2024. Mortgage arrears and insolvencies will go up exponentially and thousands will need to sell their properties quickly to get out of a financial hole. If the buyers are not there, however, or won’t pay market value, these sellers will have to take a huge hit on price or give the keys back. 

“This has serious implications for the market. Couple this with a General Election on the horizon which historically reduces market activity significantly until buyers and sellers get an idea of who is going to be in Government next. People need to get ready for a very slow and tentative market next year.”

Property investment is also likely to lose its appeal, Collar Brown said, adding: “It’s been a hard year for landlords – the leasehold reform bill, changes to EPC ratings, higher interest rates and continual red tape have made it difficult unless you are a portfolio landlord. 

“As interest rates have gone up, property investment has become a less attractive option as the yields are no longer worthwhile. This factor alone suggests that the price for investment property is likely to fall as investors fight to offload stock. The savvier landlords are getting out while they can and selling quickly through property auctions. Others will ride the storm until they get back at least what they paid for it.”