By Jay Howard and Piotr Rusinek, Co-Founders of HAMMERED and The Auction Buyers Club
The UK auction market in 2024 was shaped by the dynamic interplay of economic, political, and legislative changes.From shifts in government policies to the effects of fluctuating interest rates, the year brought us some significant highs and lows, reshaping the landscape for buyers, sellers, and investors.
There are several untapped opportunities for intrepid or experienced investors, traders, and developers in the market.
In this article, we will delve into the key drivers of market performance, the types of properties that dominated the auction market, and the factors that influenced their success.
The Impact of a Change in Government:
The transition to a new government following the 2024 general election was a pivotal moment for the property sector. The incoming administration’s policy priorities, which included housing affordability and increased social housing stock, created a ripple effect of sentiment across the auction market.
Early indications of proposed reforms, such as the expansion of compulsory purchase powers for local authorities, have led to an uptick in distressed properties entering auction rooms nationwide.
Sellers have sought to offload properties potentially affected by changes in interest rate rises (increased cost of debt/holding), the ageing landlord population, or one of the standard "D, D, D’s" of selling at auction: Death, Debt, or Divorce.
Moreover, the government’s focus on increasing opportunities for first-time buyers and bolstering regional infrastructure investments led to increased activity in areas previously considered less attractive. Auctioneers in regions such as the Midlands and Northern England reported higher attendance and stronger bidding activity, particularly for residential lots with development potential.
Interest Rate Changes:
The Bank of England’s monetary policy was another critical factor. With inflation pressures persisting, interest rates rose steadily throughout the year, peaking at 5.75% by Q4, with a single 0.25% rate reduction in time for the December auction sales, which caused mixed results.
On one hand, higher borrowing costs dampened demand from leveraged buyers. Many investors found their cost of capital prohibitively high, leading to a decline in speculative acquisitions, especially in commercial and high-value residential segments.
On the other hand, rising rates prompted an increase in market stresses, as struggling landlords and overstretched homeowners were unable to meet their mortgage obligations. This contributed to a surge in distressed stock levels, particularly in the residential auction market.
One of the more stoic elements in auctions has been the accessibility and cost of bridging finance. Unlike other forms of property finance, bridging has more or less remained unchanged since COVID. While traditional lenders have been affected by interest rate rises, bridging has not. This is partly due to how these different products are priced and where the funds come from.
That’s not to say that it is cheap; it just means that it hasn’t fluctuated greatly since the interest rate rises came into play.
Legislative Changes and Their Impacts:
Legislation also played a significant role in shaping the auction market. The Renters’ Reform Bill, introduced earlier in the year, had a notable impact on the buy-to-let sector.
With the abolition of Section 21 ‘no-fault’ evictions and the introduction of stricter landlord licensing requirements, many small-scale landlords opted to either exit the market or shift their focus from residential property to commercial property, development, or trading.
Their properties, often tenanted or vacant and requiring significant refurbishment, have become regular fixtures in many auction catalogues.
Conversely, the government’s relaxation of planning regulations for converting commercial properties into residential units boosted demand for vacant commercial lots. Developers capitalised on these changes to acquire retail and office properties in urban centres, aiming to repurpose them into residential units to meet the ever-increasing housing demand.
Property Types Dominating the Auction Rooms:
Residential Properties: The residential sector remained the backbone of the auction market in 2024. While demand softened slightly for high-value properties in prime London areas, entry-level and mid-market homes in regional towns saw robust competition. Ex-council houses, properties with potential for modernisation, and those offering strong rental yields were particularly popular among buyers.
Commercial Properties: The performance of commercial properties was more varied. Retail properties in secondary locations struggled due to declining footfall and rising vacancy rates. However, office spaces with potential for conversion to residential use found favour, as did industrial units in logistics hubs, reflecting the ongoing growth of e-commerce.
Distressed Assets: Repossessed properties and distressed sales played a larger role in 2024 compared to previous years. Auctioneers reported that these properties often achieved competitive prices, as buyers sought value in a challenging economic climate.
Development Opportunities: Land and properties with development potential continued to attract strong interest, particularly in areas benefiting from government-backed infrastructure projects. Brownfield sites, grey belt land, and vacant plots in commuter belts were hotly contested, as developers sought to address the ongoing housing shortage.
Regional Performance:
There remains a regional disparity in market performance, which was another defining characteristic of 2024. This is expected to change from April next year, as the SDLT changes will make lower-value properties more attractive simply by reducing the frictional costs of transactions.
London and the South East: These regions saw subdued activity, with high-value residential and retail properties struggling to achieve reserve prices. However, demand remained steady for properties in emerging areas with regeneration potential.
The Midlands and North: These regions experienced a surge in activity, driven by affordability and government infrastructure investment. Buyers showed particular interest in properties near new transport links or designated enterprise zones.
Scotland and Wales: Auction activity in Scotland and Wales remained consistent, with residential properties in smaller towns and rural areas attracting strong bids. The devolved governments’ housing policies, which focused on affordability and rural regeneration, supported this trend.
Highs and Lows of the Market:
Highs:
Increased participation from first-time buyers and developers targeting affordable stock.
High levels of interest in development opportunities, particularly in regions benefiting from government investment.
Competitive bidding for repossessed properties, as buyers sought value amidst economic uncertainty.
Fire-damaged, water-damaged, and structurally challenged properties saw consistent and robust prices at auction.
Lows:
Declining demand for high-value residential and commercial properties in prime and super-prime locations.
Challenges for retail properties, particularly in struggling town centres.
Reduced participation from leveraged investors, constrained by higher borrowing costs.
Looking Ahead:
As 2024 comes to a close, the auction market stands at a crossroads. While challenges remain, including the prospect of further interest rate changes and continued economic uncertainty, there are reasons for cautious optimism.
The new government’s commitment to infrastructure and housing affordability could stimulate demand in underperforming regions, while legislative changes are likely to bring more stock to the market. For investors, 2025 could present significant opportunities to capitalise on these shifts, provided they adapt their strategies to the evolving landscape.
In conclusion, the 2024 auction market was a year of transition, marked by both challenges and opportunities. By understanding the key trends and adapting to changing conditions, investors and buyers can position themselves for success in the year ahead.
Thank you for reading, and thank you to Property Auction Insights from EIG for providing key data points and inspiration for this article. A huge thank you also to the auctioneers who provided direct feedback over the past 12 months—don’t worry, I’ll keep pestering you in 2025!
Happy Bidding,
Connect with the authors on LinkedIn:
Piotr Rusinek:
Jay Howard:
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