Fri, 01 Aug 08
Property investors in the South East of England are discovering that the credit crunch can actually be very profitable.
According to property auction experts exhibiting at the Property Investor Show, buyers in the South East are snapping up bargains at auctions as the number repossessed properties being sold through auction houses dramatically increases, reveals
The percentage of repossessions up for auction has soared by almost 300% over the last three years, with numbers reaching 3,102 in the first half of 2008 compared to 799 in the first half of 2005 (see Chart 1 in attachment).
David Sandeman, Managing Director of E.I. Group, comments: 'Repossessions now make up over 20% of the properties on sale at auction. Banks and lenders offering repossessed properties are often keen to secure a sale on the day and are less worried about achieving a high price.
'As a result these properties are selling extremely well compared to other lots, with investors bagging some excellent deals. New build flats are also selling at huge discounts.'
The E.I. Group data reveals that properties in London and its home counties are the most favoured for investors buying at auction.
Within this region, the counties to the north and west of London, such as Hertfordshire, Buckinghamshire and Berkshire, are the most popular with 69% of the properties sold on the day in May from these areas.
However, investors and homebuyers are refusing to buy if they cannot obtain value for money. The proportion of lots sold in the UK as a whole slipped from 59% in April this year to 56% in May.
In the North East of England, only 39% of lots sold in May, indicating that vendors are expecting unrealistic prices for their property in today's falling housing market.
David Sandeman continues: 'Investors are benefitting hugely from the fall in house prices and the market is very much price led with properties with a low reserve selling well, particularly in traditionally popular areas such as Hertfordshire, Buckinghamshire and Berkshire.
'Conversely, buyers are rejecting properties that are not reasonably priced or that are flooding the market, causing Northern city centre properties in particular to go unsold.
Although sale rates at auctions in general are falling, a growing number of deals are taking place after the event, as vendors and buyers persist in negotiating a fair deal.
David Sandeman concludes: 'The fortunes of the buoyant auction market turned in the last quarter of 2007. Across the board, auction sales rates started to fall, with the industry average for June 08 being just over 50%, as vendors failed to adjust to realistic reserve prices.
'Consequently post auction deals are increasingly being agreed on unsold lots, with investors offering just above the reserve price.'
Nick Clark, Managing Director of the Property Investor Show, added: 'Buying property at auction has always been popular with the serious investors who attend our shows.
'We are expecting a renewed interest at the Property Investor Show as professional investors look to refresh their skills in buying at auction and benefit from the buyers' market.
'If the market falls further, even more bargains will be available in three months time and buyers will need to do their research and work out what they are prepared to pay.'
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