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Repossessions reap 86% for Allsop
Two-day auction raises £58m as lenders recoup losses through distressed sales.
Allsop’s two-day residential auction trounced expectations by raising £58m from an 86% success rate. With the average rate for residential auctions running at 59%, the result was fuelled by a surge in distressed sales as lenders attempted to recoup losses.
Repossessed properties proved irresistible to many investors, sparking competitive bidding at London’s Cumberland Hotel and Café Royal auctions on 30 October and 3 November, respectively.
Distressed sales on behalf of banks and building societies made up 75% of the 670-lot catalogue, according to Gary Murphy, Allsop’s auctioneer.
He said this was the highest percentage offered by the firm in one sale, but he stressed that keenly priced quality lots were also “highly saleable”.
Murphy believed the result reflected how much vendors are listening to advice on pricing and reserve setting, which is producing strong sales often well in excess of guides.
“We are creating a market based on careful research and the properties are then stimulating competition in the room. I would be very disappointed if we were limping up to reserves and then just stopping there,” he said.
Murphy said that, as prices settled, demand had increased for new-build flats in city-centre locations.
He said: “If sellers are sensible and keep to the formula of setting sensible guides and reserves, then I do not think we will see such dramatic falls in 2009 from where we are now.
“My personal feeling is that it is beginning to settle and that we are reaching equilibrium.
“New-build properties are beginning to find their place in the market and are now showing good value for all the reasons why they were built in the first place. They have city-centre locations for which there is demand, but at a price.”
Key sales included a freehold residential building with potential for conversion to a family home in Gunter Grove, Chelsea, SW10. With a guide of £750,000-£800,000, it sold on behalf of a property company to a private buyer for £880,000.
Property prices more than halve.
Closer analysis of individual results reinforced the depth of falls in prices experienced by buy-to-let investors, as well as homeowners unable to meet increased mortgage costs. A two-bedroom BTL investment in Birmingham (above left), acquired in December 2006 for £224,950, made £93,000, a 59% reduction. A three-bedroom house in Wigan (above right), which sold for £49,950 in July 2004, more than halved in price to raise £24,000. The purchaser, who wished to remain anonymous, said: “It is very sad because I am benefiting from other people’s bad circumstances, but at this price, I could not resist it.”
Estelle Maxwell 08/11/2008 for egi.co.uk
HousePriceCrash.co.uk – Some are celebrating the UK House Price Crash.