Phillip Arnold Auctions, the London-based property auction house, had a very interesting sale at a recent auction which highlighted a number of key points on the role of auctions in property purchase.
2016 more than probably any other year has put the spotlight on the London property market like never before. Despite tax changes and Brexit fears, we’ve seen the continuing popularity of London property in the auction room.
Phillip Arnold said: "Recent market reports on the state of the London market have shown that statistically, London continues to perform beyond expectations and this has been our experience too, with recent auctions delivering a 100% sale rate on London properties.
"This was highlighted with a recent property at auction, which exceeded expectations and when it finally sold for more than anyone expected, drew a rapturous round of applause!
"The property in question was located in Harrow, a nice semi-detached conveniently located near tube stations and the town centre. However, it was in need of complete updating, so we thought it would be ideal for a landlord or developer.
"We had an inkling interest would be high in the room as we had almost 200 enquiries prior to the auction and over 100 legal pack downloads.
"On the day, the bidding started at the guide price of £300,000 and went up steadily to £535,000 (which is what we thought it would go for) and then the bidding lulled. Just before the hammer went down, two new bidders started a bidding war and after a very exciting fifteen minutes of high-tension bidding, the property was sold for £641,000. Cue huge round of applause!
"Interestingly, it wasn’t bought by a landlord or developer, but as far as we could tell by two sisters who will probably use it as their main residence.
"The case raises a number of questions that may signal a change in the market.
"Had the rising tax cost of growing a portfolio scared the landlords off? With the average London property now costing 14.2 times the average salary, are more people looking to buy their house at auction rather than traditional routes? Are people now comfortable buying property that needs renovating and don’t want to pay a lot more for a new build?
"The location also meant that the property is a good investment for the future, near tube links and amenities, but still within the magic circle of the M25. So, with a refurbishment, we think the property will hold its prevailing market value in the long term.
"Our recent auctions have demonstrated that the London property market is still a very good short and long term target for property acquisitions. We are seeing this evidenced with the activity in the auction room as London property continues to outperform other regions at our auctions in terms of bidding activity and price achieved, we believe this is set to continue for some time yet."