Auction results show deterioration

The latest residential auction results from Allsops residential auction sale in London (Sep 14th & 16th) raised £38m with a 78% success rate. Allsops reports weakening sales after a success rate of 83% in July.

The main point to note was there was an increasing disparity between the different parts of the country with demand for prime property in London and the south east being strong in contrast to the regions.

"We are increasingly noticing a difference in buyer sentiment to lots in the South-East and those in the regions. We have historically held two day sales, one day offering regional stock, the other concentrating on London and the home counties. The recession has brought with it a flight to quality as debt-starved investors shun risk and stick to the safer locations.

This was evidenced by a strong attendance at our 16th September sale when 232 South-East lots were offered and 207 were sold. £28m was raised and 89% achieved."

In summary, the following points are worthy of note from the sales:

. Less well located investment stock will only attract interest at high double digit yields. This reflects the risk of a difficult sale in the event of vacant possession. (Lot 50 AST Middlesborough 21%, Lot 95 AST Prestwich 16%)

. Better regional locations show lower returns. Buyers need to have confidence in vacant possession values and a sustainable owner-occupier market. (Lot 75 Tenancy Stockport 4.28%, Lot 105 AST Wetherby 5.7%)

. The regions, particularly the North-East and North-West conurbations, are increasingly weaker. Market confidence is being eroded by proposed public sector cuts.

. The traditional investment market in London and the South-East remains strong with no perceptible variation on results from our May and July sales. (Lot 276 AST Lauderdale Mansions, Maida Vale, London W2 7.4%)

. 100% of all regulated tenancy investments sold.

. The ground rent market is still showing great resilience. 79 investments sold from a total of 80 offered.

. Vacant homes in good areas remain particularly saleable.

. All sites with planning permission or potential for residential development were sold. This sector of the market showed early signs of correction around 18 months ago. We therefore attribute this success to vendors adopting a more realistic approach to pricing based upon recent market evidence.

Average Yield Analysis Summary:

Assured Shorthold Tenancies 8.8% 

Assured Tenancies 5.3% 

Regulated Tenancies 5.0% 

Ground Rents over 80 years 6.0% (16.7 YP)

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